In the context of mergers and acquisitions, what do sources and uses reflect?

In the context of mergers and acquisitions, sources and uses specifically refer to the financial framework that outlines where the capital for an acquisition will come from (the sources) and how it will be allocated or spent (the uses).

The sources often include different funding options such as cash reserves, debt financing, equity issuance, or even proceeds from the sale of assets. The uses will delineate how this capital is applied, typically detailing the purchase price for the target company, any transaction fees, or costs associated with the deal.

This framework is crucial for understanding how an acquisition will be financed and helps various stakeholders assess the financial implications of the transaction. It provides transparency and clarity for investors, financial analysts, and the companies involved, enabling a comprehensive evaluation of the financial strategy surrounding the merger or acquisition.