Cash or Stock? Decoding the M&A Payment Strategies Shaping Tech Deals
An analysis of M&A deal structures examines whether cash, stock, or hybrid consideration is optimal, highlighting major tech acquisitions and market cyclicality.
Cash or stock? When evaluating major M&A transactions, the choice of payment currency plays a critical role alongside the valuation itself. One of the largest tech acquisitions involving Israeli roots was American cybersecurity giant Palo Alto Networks completing its acquisition of CyberArk. The deal combined cash and stock components, leaving CyberArk shareholders with Palo Alto shares.
When the deal was signed, CyberArk was valued at $25 billion, but by closing six weeks later, a dip in Palo Alto's stock brought the consideration down to approximately $21.5 billion. However, Palo Alto's stock has since surged by 125%, valuing the transaction at over $40 billion today. Consequently, CyberArk shareholders who held onto their equity component enjoyed massive double-digit gains.
Another memorable transaction was Nvidia's acquisition of Israeli tech firm Mellanox for roughly $7.4 billion, paid entirely in cash. Mellanox founder and CEO Eyal Waldman, who received about a quarter of a billion dollars, later noted that while he preferred not to sell, an offer 40% above market value was impossible to refuse. In hindsight, had the consideration included Nvidia stock, Mellanox shareholders would have reaped even greater rewards, as Nvidia's stock has skyrocketed by over 3,000% since the acquisition.
Cash vs. Stock Trends
Following years of robust market growth, equities became a convenient acquisition currency due to high valuations. Among major deals announced, Elon Musk's SpaceX completed an all-stock mega-acquisition, paying $60 billion for Anysphere, developer of the Cursor AI coding assistant. Conversely, Paramount's pending acquisition of Warner Bros for roughly $111 billion is structured entirely in cash.
In Israel's high-tech sector, recent major acquisitions have predominantly relied on cash. For example, Google acquired Wiz for $32 billion, and ServiceNow bought Armis for $7.75 billion. Data from Wells Fargo illustrates broader market trends: following the 2022 interest rate hikes and equity market dips, 72% of US deal volume was conducted in cash, dropping to 55%-59% over the subsequent three years. Meanwhile, mixed cash-and-stock structures grew to 32% of deal volume in 2025, while all-stock deals accounted for 13%.
"I wouldn't say the market has decisively shifted toward cash or stock; it is more cyclical," says Nati Ginor, head of investment banking at Jefferies Israel. "During periods of low interest rates, debt was cheap and all-cash deals were much easier to finance. As borrowing costs rose, buyers became more sensitive to leverage and more willing to use stock or mixed consideration."
Upside and Risk Allocation
How is the optimal structure determined? According to Adv. Shirel Guttman-Amira, partner and head of corporate, securities and capital markets at Agmon with Tulchinsky, a buyer's balance sheet flexibility is a primary consideration. Heavily leveraged companies struggle to secure cash financing, whereas un-leveraged firms retain greater optionality.
Another key factor is whether the buyer wants a strategic partner who remains invested in the combined entity. Guttman-Amira points to Energean's acquisition of certain assets or similar energy deals where equity allotments create long-term strategic alignment. Furthermore, Ginor emphasizes that choosing between cash, stock, or a hybrid model ultimately dictates how risk and future potential are divided between buyer and seller.
"Cash is the cleanest route. The seller receives certainty and immediate liquidity, while the buyer retains 100% of the future upside if the deal succeeds—and bears 100% of the risk if synergies fail to materialize," Ginor explains. Conversely, all-stock transactions keep the seller invested in the acquiring company, aligning interests when strong strategic synergies and growth potential exist.
Lessons from Teva and Private Tech
One company that paid a heavy price for its financing structure is pharmaceutical giant Teva, which in 2016 executed its largest acquisition ever by purchasing US-based Actavis for over $35 billion. Financed primarily through massive debt to avoid shareholder dilution, the deal hobbled Teva for years, triggering severe credit downgrades, plant closures, and mass layoffs. Only a decade later has Teva fully put the misadventure behind it, regaining investment-grade status.
Sagiv Mizrahi, CPA and partner at BDO's transaction advisory division, highlights that industry alignment also dictates payment currency. If both companies operate in the same sector and seek powerful synergies, sellers naturally demand shares in the combined entity. For instance, the pending merger between real estate giants Israel Canada and Acro involves a 60% stock and 40% cash mix.
When private tech giants acquire startups, dynamics shift. OpenAI acquired Ziv Atar's Glass Imaging for $300 million; although cash was partially offered, sellers opted entirely for shares. Mizrahi notes that young technology companies prioritize preserving cash, while mature private giants with liquid secondary markets offer attractive equity upside, ensuring founders remain locked in and motivated to drive future growth.
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