What does an acquirer benefit from paying with stock?

Paying for an acquisition with stock benefits the acquirer primarily by preserving cash and potentially deferring taxes for the seller. When a company uses its stock as currency for a purchase, it conserves its cash reserves, which can be critical for maintaining operational liquidity, investing in growth, or managing existing liabilities. This preservation of cash enables the acquirer to allocate financial resources more flexibly.

Additionally, for the seller receiving stock instead of cash, there may be tax advantages. Generally, when a seller receives stock as part of a transaction, they might be able to defer capital gains taxes until they sell the received shares. This aspect is particularly appealing if they believe the value of the acquiring company's stock will increase over time.

While the other options might seem beneficial, they don't directly represent the primary advantages of using stock in an acquisition. For instance, immediate liquidity for shareholders is more closely related to cash transactions. Similarly, while managing market volatility is important, paying with stock does not inherently mitigate those risks. Finally, financing options related to debt are influenced by broader financial strategies and market conditions rather than just the choice of payment method in acquisitions. Therefore, the correct answer highlights the strategic advantages related to cash preservation and tax implications that stock payments can bring to the ac