How much cash did BenShield pay for Matco in the example?

• A. 216 million
• B. 90 million
• C. 540 million
• D. 180 million

Answer: (A)

When analyzing an acquisition, the cash paid is the cash portion of the total purchase price, not the entire price itself. In the Matco example, the total consideration BenShield agreed to pay was 540 million, but only 216 million was provided as cash at closing; the rest was covered with noncash components such as stock or other forms of consideration. So the actual cash outlay is 216 million. The other numbers in the choices reflect the total price or noncash parts, not the cash portion.