I have a stupid semantics issue that's hanging me up and

Basically how does P gain ownership of Q by paying in units of 'ownership in P'

Or, if P acquires Q's assets by issuing shares, and then Q is dissolved and becomes part of P, then...isn't P just paying itself? What actual exchange is occurring?

Typically, P corp is issuing shares of itself and then giving those shares to the shareholders of Q corp in exchange for Q corp shares. P corp then owns Q corp and the former Q corp shareholders now own P corp shares.

>>1887985
To make it a little more clear: the shares aren't going to Q corp. They are going to the owners of Q corp.

>>1887991
So...it's like P is saying "We want Q, so we'll be taking Q now, and all of you people who owned Q before own part of P instead"?

>>1888001
The owners of Q have to agree to the exchange (they typically hold a vote according to the corp bylaws). Hostile takeovers are a thing, but they work a bit differently.

>>1888006
The context is I'm doing Accounting for Combinations, and I wasn't able to get to the actual accounting part because I was having a hard time finding something that explained the language of the setup.

The text kinda glosses over the nature of the transaction to jump right into the accounting.

So it seems like what I'm misunderstanding is that P isn't paying Q only to immediately receive back what it payed through the merger, P is paying the owners of Q.

The way I was understanding it was like P saying "Hey Q, I'm buying all your stuff. I'm paying you for your stuff by giving you my car, except the car is mine now because it's part of 'your stuff' which I just bought all of"

>>1888032
If P isn't acquiring shares of Q, but rather just some assets of Q, it could be the case that P is giving shares to Q itself in exchange for some amount of assets (e.g. goods). For instance, P could give Q $100k worth of shares in exchange for $100k worth of cars. P then wouldn't actually own Q, they would just own the cars. This strikes me as unusual though.

>>1887967

In this context issue means create shares out of thin air.

P corp issues(creates) shares and trades them for assets of Q corp. (see "asset sale vs share sale")

Previously outstanding shares of P corp are diluted, but P corp now has equity in the newly acquired assets.

Not 100% sure.

>>1888151

Forgot to mention, if they bought 100% of Q corp assets, Q corp would then be dissolved.

>>1888032

>"Hey Q, I'm buying all your stuff. I'm paying you for your stuff by giving you my car, except the car is mine now because it's part of 'your stuff' which I just bought all of"


"Hey Q, I'm buying all your CAR PARTS. I'm paying you for your CAR PARTS by installing them and adding you as a LIEN HOLDER on the vehicle title. Now it's both our stuff."

Sorry if that doesn't exactly make sense but I think I gets the point across.

>>1888151
Makes sense. Like I said, my previous issue seemed to stem from the fact that I wasn't making a distinction between Q and Owners of Q.

I didn't get how P acquired Q by selling Q an ownership interest in P to Q.

But in the framework of P acquiring Q and its assets by giving shares of P to holders of shares of Q in exchange, it makes more sense to me.

>>1888196
>acquiring Q and its assets

That's not possible. It's either one or the other.

The OP specifically stated it was an asset sale not a share sale. No one is acquiring Q.

>>1888234
It's not possible? Then I'm just using the wrong language. What I mean is P is issuing shares for Q's assets, and probably that Q is dissolved after. My use of 'acquiring Q' was using colloquial rather than business language. Whoops.