When a deal like Microsoft buying Activision goes through, does the money that the company is paying go to the company being bought? Does it go to the shareholders? Does the Activision stock just go away?
The reason I am confused is, if Microsoft gives Activision billions of dollars, at the end of the day, isn’t Microsoft effectively giving themself billions of dollars?
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I’m using Microsoft and Activision as an example, but I am curious about how this works in general.
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If you go to the store and buy an apple for $5, where does the money go? To the person who originally owned the apple: the storeowner.
It is the same concept. if you buy something, there was a previous owner and that is where the money goes. In the case of buying another company… the previous owner could be a singular person, could be several people who own certain shares, or it could even be a whole other company.
That is why people who start companies and then sell them walk away with a big check. They were the previous owner, and they received the money from the buyer.
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