2 ms·

Cash is an asset like any other, why wouldn't that be acquired when the company is purchased?

• bruce511 2y ago
  It can be, but you pay extra for it. In other words if the company is worth n (with no cash on hand) then it's worth n+c with c cash on hand. Every transaction is different, but each one I've been involved in the cash part is simply removed from the equation. To put it another way, cash is somewhat different because the value is so easily determined. $1 costs $1. I buy a company because I value the asset more than the seller does. I see something the seller does not (or vice versa). So the value to the buyer is more than the value yo the seller. (That includes the notion of asset liquidity.) So, at a fundamental level you don't "buy cash".
  • rswail 2y ago
    I buy a company because it has something I want. The seller is selling because they no longer want what the company offers. The price I buy the company at is at least as much as the seller values it, otherwise they would not sell. If I'm buying a company out of bankruptcy then either I'm taking on both their debts and their assets (including cash), or there's some way to sequester the debts from the assets, which the creditors will not accept.
    • bruce511 2y ago
      I agree with all you are saying. None of which negates the point about nor buying cash. In the case you mention (where the company is bankrupt, it has (by definition) run out of cash. Certainly there's not enough cash lying around to move the needle.