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As organizations embark on these transformative journeys, one critical aspect that demands meticulous consideration is the financing model. The risk-reward equation in M&A financing is a delicate balance, where potential pitfalls and gains play a pivotal role in shaping the merged entity’s future.
Debtfinancing is much more common, and the GE firm is often the first institutional investor. The main risk factor in deals is executing the growth plan, not default risk due to debt (PE) or product/marketrisk (VC). Also, you can get in more easily from a middle-market or boutique bank.
The WACC represents the overall cost of financing a company’s operations and is used to discount future cash flows to their present value. The WACC is used in DCF because it represents the average rate of return required by all the stakeholders (both equity and debt holders) to support the company’s operations.
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Debt Financing 
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