Where does the money go for company buyouts?

Question

Say that we have two companies, Alpha and Bravo, neither have parent companies.

Alpha wants to buy out Bravo for 30 Million. Bravo accepts. Where does that money go? If it goes to Bravo but that’s under Alpha now, wouldn’t that just be Alpha paying themselves?

In: Economics

Answer 1

It goes to Bravo’s owners. If Bravo was privately owned, the owners just got very rich. If Bravo is publicly traded, each shareholder will get $X per share, where $X is the purchase price divided by the number of shares in circulation.