Final answer:
In acquisitions, companies face direct out-of-pocket costs, such as payment to advisors and consultants, and indirect costs like opportunity costs. Additionally, stock registration and issuance costs include SEC filing fees and similar expenses.
Step-by-step explanation:
Business Combination Costs in Acquisitions
When companies engage in business combinations through mergers or acquisitions, they incur various costs and expenses. Direct out-of-pocket costs include explicit expenses like paying professional fees to legal advisers, accountants, and other consultants.
These costs are tangible and directly associated with the transaction process. Indirect costs, however, are more subtle and can be considered as implicit costs. They represent the opportunity costs of diverted management time and resources that could have been allocated elsewhere within the company.
As for stock registration and issuance costs, which are part of the out-of-pocket expenses, they encompass the costs related to SEC filing fees and other regulatory expenses incurred in the process of issuing new shares or registering stock as part of the financing of the acquisition.
In the context of a company obtaining money from its sale with a large number of shareholders, the timing and structure of the acquisition deal will determine when the company receives funds. This can include immediate payments at the closing of the transaction or deferred payments contingent on the future performance of the acquired entity.