What is the primary reason cash is preferred as a payment method in acquisitions?

The primary reason cash is preferred as a payment method in acquisitions is that it offers immediate ownership. When cash is used, the transaction is straightforward and provides the selling shareholders with liquidity right away. This immediate transfer of funds allows the buyer to secure full ownership and control of the acquired company quickly, without the complexities associated with other forms of payment, such as stock or debt instruments that may require additional approvals or lengthy negotiations.

In transactions involving stock or deferred payments, there can be uncertainties related to future performance or valuations, whereas cash transactions finalize the deal immediately, making it attractive for both parties. The simplicity of cash transactions often leads to faster closings, which can be advantageous in competitive acquisition scenarios.