The housing market is abuzz with cash buyers who seek bargains and don’t want the delays and hassles of securing bank financing. There are several advantages of paying all cash – you can generally get a lower price from the seller because the risk of the deal falling through is lower and the buyer can close so much faster.
The same is true for M&A: if you can pay cash for transactions you have an advantage over buyers with financing contingencies. I expect with the amount of excess cash on the balance sheets of many companies we will see an increase of all cash deals, which will be refinanced down the road. Just look at the Miami- Fort Lauderdale real estate market — Zillow reports that over 50% of transactions were all cash, when in 2006 they were a mere 13% of transactions. Watch for the second half of 2011 to have an increase of all-cash M&A deals.