Why wouldn't a company use all its available cash to fund an acquisition?

Question

IBPrep · Accepted Answer

Reasons to preserve cash: (1) Working capital buffer, need minimum cash to run operations; (2) Mandatory dividend payments to shareholders; (3) Litigation reserves, especially in healthcare, tech, financials; (4) R&D commitments, pharma and tech can't pause spending; (5) Debt covenants, minimum cash balance requirements; (6) Optionality, preserve dry powder for other acquisitions; (7) Credit rating, agencies look at cash buffers for IG ratings; (8) Foreign cash trapped overseas (pre-TCJA was a big issue).

Why wouldn't a company use all its available cash to fund an acquisition?

Answer

More M&A interview questions

Why wouldn't a company use