How are listed buyers paying for acquisitions in 2026?
Increasingly with a mix. Cash-and-stock combinations were 40 percent of US public-to-public deals announced in the first half of 2026, against 25 percent in 2025 and 14 percent in 2023. Stock-only deals fell to 33 percent from 45 percent in 2025, and cash-only deals were 27 percent (Houlihan Lokey, 2026 Transaction Consideration Study, October 2026, 306 transactions above $50 million, LSEG data).
The study's own reading is that strong equity valuations and elevated interest rates made stock the leading currency from 2023 to 2025, and that as deal sizes grew in 2026 acquirers reached for combinations to protect balance-sheet flexibility. A buyer whose shares trade well has a cheap currency; a buyer facing a 5 percent cost of debt has a reason not to borrow the whole price.
The buyer's own valuation predicts the form of payment. Acquirers trading below a 10x price-to-earnings multiple paid cash only in 43 percent of deals; those between 10x and 20x paid stock only in 71 percent; those above 20x split the three forms almost evenly, with cash-and-stock most common at 36 percent (Houlihan Lokey, October 2026). The private seller's version of that test is simple: before the first offer arrives, know what the listed buyer's shares trade at and what it has used as currency in its last three acquisitions.
Size and sector matter too. Deals below $1 billion were stock only 49 percent of the time, the highest share of any size band, while stock-only consideration ran to 70 percent in financial targets and 75 percent in natural resources, and cash-only to 61 percent in manufacturing and 52 percent in services (Houlihan Lokey, October 2026). The smaller the deal and the more the sector trades on book value or reserves, the more likely the offer is paper.
What does accepting shares instead of cash cost the seller?
Most of the premium. Measured against the target's share price one day before announcement, the median premium in the first half of 2026 was 34 percent in cash-only deals, 23 percent in cash-and-stock deals and 9 percent in stock-only deals (Houlihan Lokey, October 2026). Over the whole study period the gap never closed: cash paid 49 percent in 2023 against 15 percent for stock, and 43 percent in 2025 against 18 percent.
The study's explanation is the one every seller is given at the table: shareholders who take stock participate in the upside of the combined company, so they are asked to accept less up front. That is true, and it is also a price. A 25-point difference in premium is the cost of the option on the combined business, and the seller is buying that option whether or not it would have chosen to.
The compression in 2026 fell hardest on paper. Stock-only premiums halved from 18 percent in 2025 to 9 percent, cash-only premiums fell from 43 to 34 percent, and cash-and-stock premiums barely moved, from 24 to 23 percent (Houlihan Lokey, October 2026). Measured four weeks before announcement the stock-only premium was 8 percent, which is inside the range a target's own share price moves in a month.
For a private seller there is no pre-announcement share price to anchor to, so the premium is invisible and the same economics apply in a different form. A listed buyer offering shares at the headline value of a cash bid is offering less, not the same, and the difference is the option it is asking the seller to buy. The useful question is not whether the shares are worth the headline but what cash price the buyer would pay instead, and whether that gap is one the seller would choose to invest in that buyer's stock. Our reading, not the study's.
| Consideration | Share of deals, 2023 | Share of deals, 1H 2026 | Median premium, 2023 | Median premium, 1H 2026 | Acquirer shares, one day after, 1H 2026 |
|---|---|---|---|---|---|
| Stock only | 48% | 33% | 15% | 9% | -0.2% |
| Cash and stock | 14% | 40% | 25% | 23% | 0.0% |
| Cash only | 39% | 27% | 49% | 34% | -1.2% |
What happens to the shares the seller is paid in?
They move on the announcement, and for stock-only deals the median move has been down in every period measured. The median one-day change in the acquirer's share price after a stock-only announcement was negative in 2023, 2024, 2025 and the first half of 2026, at 0.3, 0.3, 0.8 and 0.2 percent, and negative at one week in every period as well (Houlihan Lokey, October 2026). Cash-only announcements compared favourably; cash-and-stock produced the widest range, from a 4.7 percent median 60-day gain in 2023 to a 5.5 percent loss in 2024.
The moves are small at the median and that is the point. A seller who agrees a fixed number of shares has agreed a price that is set by the acquirer's market, and the first repricing arrives the morning the deal is public. Between signing and closing, which in listed deals runs months, the seller holds the buyer's equity risk with none of the buyer's control.
Collars, which cap that risk, are rare. The study found 11 collared transactions from 2023 to mid-2026, 5 percent of deals that carried any stock, and where collars existed the floor sat on average 16.1 percent below and the ceiling 19.0 percent above the acquirer's share price the day before announcement. Ten of the 11 used a fixed-price ratio, in which the dollar value per target share is fixed and the share count floats, against one fixed-exchange ratio (Houlihan Lokey, October 2026, FactSet data).
A private seller is in a better position to ask for protection than a public target, because there is no shareholder vote and no market to signal to. In our judgement the ask should be a fixed dollar value with the share count set at closing, a collar if the buyer insists on a fixed count, and a clear statement of what lock-up and registration terms apply to the shares received. None of that is in the study; it is what the study's figures argue for. Nothing here is securities, tax or legal advice, and the treatment of share consideration differs by jurisdiction.
Does owning part of the buyer buy any say in it?
Less than the ownership implies. Across stock-only deals, target shareholders ended up with an average of 25 percent of the combined company and 18 percent of its board seats; in cash-and-stock deals the figures were 15 and 13 percent, and in cash-only deals both were zero (Houlihan Lokey, October 2026). The study's own phrase is that board representation, while influenced by ownership, was not directly proportional.
By year the pattern is the same. Target shareholders held between 14 and 18 percent of the combined company after the average deal from 2023 to the first half of 2026, and between 10 and 17 percent of the board (Houlihan Lokey, October 2026). The ownership is real and the governance is partial, which is the right frame for a founder being offered a seat as part of the consideration.
For an owner selling into a listed buyer the share stake is a financial position, not a continuing role, unless the agreement says otherwise. The questions that follow are the ones a minority investor would ask: what the buyer's leverage and dividend policy are, how liquid the shares are relative to the stake, and what the lock-up does to the seller's ability to diversify. The sale is a sale even when it is paid in equity. Our reading, not the study's.
The cleanest comparison is the cash alternative. A seller who can obtain a cash bid from a sponsor and a share bid from a strategic has, in the study's figures, a measure of what the shares are being discounted for. Where no cash bid exists, the figures stand in for one: the buyer's paper has historically been accepted at a premium a third the size of cash, and it reprices on announcement.
“A share offer is two decisions dressed as one: the sale of the business and an investment in the buyer. The data says the market prices the second decision on day one. The seller should price it before signing.”
As of October 2026
Sources: Houlihan Lokey, 2026 Transaction Consideration Study, October 2026, LSEG and FactSet data, for the consideration mix by year (stock only 48%, 49%, 45% and 33%; cash and stock 14%, 13%, 25% and 40%; cash only 39%, 37%, 30% and 27% across 2023, 2024, 2025 and the first half of 2026), the mix by acquirer price-to-earnings band (cash only 43% below 10x; stock only 71% between 10x and 20x; cash and stock 36% above 20x), by transaction value (stock only 49% below $1 billion) and by target industry (stock only 70% financial and 75% natural resources; cash only 61% manufacturing and 52% services), median premiums to the price one day before announcement (cash only 49%, 33%, 43% and 34%; cash and stock 25%, 16%, 24% and 23%; stock only 15%, 16%, 18% and 9%) and four weeks before (stock only 8% in the first half of 2026), median acquirer share price changes one day, one week and 60 days after announcement, 11 collared transactions equal to 5% of deals carrying stock with average floors 16.1% below and ceilings 19.0% above the acquirer's prior-day price and 10 fixed-price ratios against one fixed-exchange ratio, and average post-transaction target ownership and board seats (25% and 18% stock only; 15% and 13% cash and stock; 14% to 18% and 10% to 17% by year). The application to private sellers, the comparison with a cash alternative and the negotiating positions are our judgement. Nothing in this article is securities, tax or legal advice.
Corrections: factual errors are corrected on the page and the correction dated. Write to admin@kadenwoodgroup.com.
This position sits within our deal structuring practice.