Definition of All Cash Offer

What does the term "all cash offer" mean in the world of the stock market? What is the definition of the term "all cash offer"?

When it comes to Wall Street, the term "all cash offer" refers to when one company offers to acquire another for 100% cash. Berkshire Hathaway, for instance, which generates oceans of cash each and every month, is fond of paying for companies outright in cash.

All cash offers are fairly common. For the acquirer, all cash offers can be beneficial as many companies struggle with how they should deploy their cash. Using this money to acquire companies can be a great way to put excess cash to work.

For companies that are being acquired, cash also makes a great deal of sense. If a company is acquired in all stock, for instance, the acquiring company's share value could fluctuate wildly, leaving the acquired company with a much lower purchase price than initially thought. The downside of being acquired in cash, however, is that there are some tax implications and capital gains will be incurred.

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