1 April 2026
Deal Structure
Deal Structure
The Case for
All-Stock Mergers
The Case for
All-Stock Mergers
The Case for
All-Stock Mergers
The Case for
All-Stock Mergers
The Case for
All-Stock Mergers
Most deals today are getting harder to close. In an elevated rate environment, the all-stock structure removes the financing constraint from the transaction entirely — and works regardless of where rates sit.
Most deals today are getting harder to close. In an elevated rate environment, the all-stock structure removes the financing constraint from the transaction entirely — and works regardless of where rates sit.
$5–8T
$5–8T
Estimated capital required over 5 years for AI infrastructure alone
Estimated capital required over 5 years for AI infrastructure alone
Zero
Repeat acquirers of sub-$300M, below-NAV public companies globally
2-speed
The bifurcated M&A market in 2026 — large caps transact, smaller buyers stall
The M&A market in 2026 is two-speed. Large corporates with deep balance sheets are moving aggressively. For everyone else, the economics are more difficult — unless the structure sidesteps the financing problem entirely.
The M&A market in 2026 is two-speed. Large corporates with deep balance sheets are moving aggressively. For everyone else, the economics are more difficult — unless the structure sidesteps the financing problem entirely.
This article examines why all-stock mergers have become the structurally superior option in the current rate environment, and what they offer companies in the $30M–$300M market cap range.
The analysis draws on current M&A market data, rate cycle dynamics, and Altuva's own acquisition framework as a NASDAQ-listed holding company.
This article examines the structural causes of persistent NAV discount in public equities and sets out why this condition has never been more pronounced than it is today.
The analysis draws on proprietary balance-sheet screening and third-party research from Research Affiliates, Goldman Sachs Asset Management, Pzena Investment Management, and Russell Investments.
$71.5B
$71.5B
$71.5B
Union Pacific / Norfolk Southern combination — structured as an all-stock swap to bypass elevated debt costs
Union Pacific / Norfolk Southern combination — structured as an all-stock swap to bypass elevated debt costs
Union Pacific / Norfolk Southern combination — structured as an all-stock swap to bypass elevated debt costs
3.75%
3.75%
3.75%
Federal Reserve funds rate ceiling following the pause in cuts in early 2026, keeping cost of capital elevated
Federal Reserve funds rate ceiling following the pause in cuts in early 2026, keeping cost of capital elevated
Federal Reserve funds rate ceiling following the pause in cuts in early 2026, keeping cost of capital elevated
160+
160+
160+
Years of combined experience in special situations and complex capital structures across the Altuva team
Years of combined experience in special situations and complex capital structures across the Altuva team
Years of combined experience in special situations and complex capital structures across the Altuva team
What Happens to Deals When Rates Are High
What Happens to Deals When Rates Are High
What Happens to Deals When Rates Are High
Most acquisitions are financed with debt. A buyer borrows money, pays for the target, and services the loan from the acquired business's future cash flows. When rates are low, this is manageable. When rates are elevated and lending standards are tight, the entire equation shifts.
Higher borrowing costs reduce the maximum price a debt-financed buyer can justify paying, because more of the target's future earnings must be reserved for debt service rather than returns to the buyer. Lenders, conscious of increased default risk in a high-rate environment, apply more stringent underwriting standards, narrow leverage ratios, and longer approval timelines. The result is a widening bid-ask spread: sellers hold firm on valuation while buyers cannot support the price with debt. Deals stall.
At the end of 2024, the valuation discount of U.S. small-cap stocks relative to large-cap peers stood at approximately 40%, well below the historical median gap of roughly 5%, and sitting in the bottom 4th percentile since 1990. Global small caps now trade at discounts last seen only during the Nifty Fifty and dot-com eras — extreme episodes defined by irrational concentration at the top of the market.
In the United States, small caps trade at a 26% discount to large-cap peers on a price-to-earnings basis, excluding unprofitable companies, which is close to historic lows. Outside the U.S., international small caps, which have historically traded at a premium to local large caps, have flipped to an 8% discount despite offering higher forward earnings growth.
The numbers that matter most: more than 5,000 public companies globally trade below their intrinsic asset value. U.S. small caps have underperformed large-cap peers by approximately 103% cumulatively over the last decade. The Russell 2500 Value Index price-to-book ratio has fallen to multi-decade lows. And zero repeat acquirers of sub-$300M, below-NAV public companies exist globally. Not few. Zero.
This dynamic has created a bifurcated market — high-quality assets commanding premium multiples because large, well-capitalised buyers are competing for them, while the rest of the market faces a tougher environment.
This dynamic has created a bifurcated market — high-quality assets commanding premium multiples because large, well-capitalised buyers are competing for them, while the rest of the market faces a tougher environment.
Deloitte — 2026 M&A Trends Survey
Deloitte — 2026 M&A Trends Survey
PwC's 2026 M&A outlook estimates that between $5 trillion and $8 trillion of investment may be required over the next five years to fund AI technologies and enabling infrastructure alone — placing further upward pressure on the long-term cost of capital as sovereign wealth funds, hyperscalers, and private credit compete for the same pool of debt.
At the end of 2024, the valuation discount of U.S. small-cap stocks relative to large-cap peers stood at approximately 40%, well below the historical median gap of roughly 5%, and sitting in the bottom 4th percentile since 1990. Global small caps now trade at discounts last seen only during the Nifty Fifty and dot-com eras — extreme episodes defined by irrational concentration at the top of the market.
In the United States, small caps trade at a 26% discount to large-cap peers on a price-to-earnings basis, excluding unprofitable companies, which is close to historic lows. Outside the U.S., international small caps, which have historically traded at a premium to local large caps, have flipped to an 8% discount despite offering higher forward earnings growth.
The numbers that matter most: more than 5,000 public companies globally trade below their intrinsic asset value. U.S. small caps have underperformed large-cap peers by approximately 103% cumulatively over the last decade. The Russell 2500 Value Index price-to-book ratio has fallen to multi-decade lows. And zero repeat acquirers of sub-$300M, below-NAV public companies exist globally. Not few. Zero.
The All-Stock Structure
The All-Stock Structure
The All-Stock Structure
An all-stock merger removes the financing constraint from the transaction entirely. No debt is required. No lender must approve the economics. No future cash flows must be reserved for debt service. The deal closes on the strength of two parties' agreement about relative value.
For the company being acquired, the structure offers several advantages that cash deals and leveraged buyouts cannot match. There is no risk that a financing contingency delays or kills the deal. There is no debt loaded onto the business post-close, which means the operational focus remains on running and growing the company rather than servicing acquisition liabilities. Management and shareholders receive equity in a combined, listed entity with ongoing liquidity — rather than cashing out into a concentrated private position or accepting a compressed valuation in a cash deal.
Three structural forces have combined to create and entrench this mispricing. The first is the passive investing wave. Passive funds now account for approximately 62% of small-cap fund assets, up from 40% in 2014. Passive strategies cannot discriminate between a fairly priced company and one trading at 30 cents on the dollar of net asset value. Capital flows indiscriminately. The result is a systematic failure to correct prices that are obviously wrong.
The second force is the analyst coverage desert. While large-cap stocks are typically covered by an average of 16.4 sell-side analysts, small caps receive coverage from only about 5.7. For micro-cap companies below $300 million in market capitalisation, coverage thins further still, with nearly one-third covered by a single analyst or none at all. Markets are informationally efficient only where information flows. Where it does not, mispricing can persist indefinitely.
The third force is the M&A gap. Private equity firms in the U.S. alone sit on an estimated $1 trillion in dry powder. Yet that capital is systematically directed toward private businesses or larger public companies where deal economics justify the infrastructure costs of a major transaction. Sub-$300 million public companies fall below the minimum viable deal size for institutional capital. They are not overlooked because they are bad businesses. They are overlooked because the market has no systematic mechanism to unlock their value.
Structural Advantages at a Glance
For the acquirer, the all-stock structure is capital-efficient and scalable. Each acquisition strengthens the platform without depleting cash reserves, and the combined entity's growth in NAV per share increases the acquisition currency for subsequent transactions.
For the target, there is no financing contingency risk, no post-close debt burden, and no pressure to generate cash specifically for debt service — only equity in a growing, listed platform.
The rise of passive investing, the retreat of sell-side analyst coverage from smaller companies, and the absence of systematic acquirers at the sub-$300M level are all durable features of modern capital markets, not temporary dislocations.
Research Affiliates projects that U.S. small-cap indexes can outperform large-cap peers by 4% annualised over the next decade, driven directly by the extremity of the current discount.
Why This Matters More Now
Why This Matters More Now
Why This Matters More Now
Global dealmaking has become increasingly polarised. Large corporates and well-capitalised sponsors are able to transact through complexity; smaller buyers face a narrowing set of viable structures. For public companies in the $30 million to $300 million market capitalisation range, the options available in the current environment are stark.
Remain independent and absorb the cost of being listed — the compliance burden, the quarterly scrutiny, the analyst neglect — with no reliable access to capital markets. Seek a cash sale at a depressed valuation. Or find a partner who understands the underlying value and can offer a structure that works regardless of where rates sit.
Altuva offers that third path. And critically, the structure does not depend on a rate environment. It works when credit is tight and when it is loose. It works when markets are falling and when they are rising. The only requirement is that both parties agree on what the business is worth and believe in the logic of the combined platform.
Altuva Group is a NASDAQ-listed permanent capital vehicle built to fill this gap. The platform acquires undervalued public companies using Altuva's own publicly traded equity as acquisition currency. This is not a fund with a fixed mandate and a finite timeline. It is a compounding vehicle designed to grow with every transaction.
By acquiring companies trading at 30 to 50 cents on the dollar of NAV using Altuva equity that trades at a meaningful premium to NAV, each deal is immediately accretive to NAV per share. The acquisition currency grows. The platform's capacity to execute the next deal grows with it.
The team brings over 160 years of combined experience in special situations, distressed investing, and complex capital structures, drawn from Oaktree Capital, Elliott Management, Brevan Howard, Cerberus, BlackRock, Macquarie, and Merrill Lynch, with more than $30 billion deployed across special situations globally.
What the Partner Company Gets
What the Partner Company Gets
What the Partner Company Gets
When a company merges with Altuva through an all-stock transaction, the management team and shareholders receive equity in a NASDAQ-listed holding company with a growing portfolio of acquisitions, a compounding NAV-per-share model, and a team with over 160 years of combined experience in special situations and complex capital structures.
They retain meaningful ownership in the combined entity. They gain access to a platform actively working to close the gap between their company's market price and its actual value. And they avoid the friction that characterises heavily leveraged acquisitions: no debt load post-close, no exposure to future rate movements on acquisition financing, no pressure to generate cash specifically for debt service.
For dealmakers, predictability now matters as much as rate levels. Improved rate visibility and structural certainty are expected to support increased dealmaking activity in 2026, particularly for well-prepared buyers who can offer execution certainty. An all-stock merger with Altuva provides that certainty: it does not require a financing window to open, a lender to approve, or a market rally to make the economics work.
Once Altuva acquires control of a target, a structured three-phase playbook executes. In the first phase (months two to four), the focus is stabilisation: eliminating cash burn, refocusing capital allocation on shareholder value, and reviewing assets and strategic alternatives.
In the second phase (months five to ten), the platform monetises liquid or non-core balance sheet assets, converting realised value into deployable capital. The asset triage process assesses each balance-sheet line item against whether it is productive, realizable, and essential to the ongoing business. Assets that fail the first two criteria are prioritized for disposition.
In the third phase (months eleven to twelve), cash is returned to the holding company, strengthening the acquisition currency for the next transaction. This is the mechanism that converts a single transaction's returns into a compounding capital allocation engine. The model requires no leverage, no forced exit timeline, and no growth assumption to generate returns. The value is in the assets already on the balance sheet.
Why All-Stock Works Now
No debt required — no lender approval or financing contingency
No post-close debt burden on the acquired business
Closes on relative value agreement, not credit market conditions
Equity in a listed entity with ongoing liquidity
Structure is rate-agnostic — works in any credit cycle
Capital-efficient and scalable for the acquirer
U.S. small-cap P/E discount to large caps: 26% (ex-unprofitable)
International small-cap discount to local large caps: 8%
Passive funds' share of small-cap assets: 62% (up from 40% in 2014)
Average analyst coverage, large caps: 16.4 analysts
Average analyst coverage, small caps: 5.7 analysts
Micro-caps with one analyst or fewer: approximately one-third
U.S. private equity dry powder: ~$1 trillion
Market Context
$58B
Devon Energy / Coterra merger of equals — structured as an all-stock transaction
K-shaped
How analysts describe the 2026 M&A recovery — bifurcated between large-cap and everyone else
$30B+
Combined capital deployed by the team across special situations globally
160 yrs
Combined team experience in special situations and distressed investing
Target Profile
Market cap between $30M and $300M
NASDAQ or NYSE listed with sufficient float
Management seeking liquidity without valuation compression
Board accessible and aligned on long-term value
No material secured debt exceeding asset coverage
~$90M in annual revenue
$15M in adjusted EBIT
7+ completed acquisitions
15+ global markets
9-year operating track record
Software and digital commerce focus
What You Receive
Equity in a NASDAQ-listed holding company
Compounding NAV-per-share model
160+ years combined team experience
Platform focused on closing the price-to-value gap
Four Reasons Debt-Financed
Deals Stall in This Environment
Four Reasons Debt-Financed
Deals Stall in This Environment
Four Reasons Debt-Financed Deals Stall in This Environment
Four Reasons Debt-Financed Deals Stall in This Environment
Each of these forces is independently sufficient to disrupt a leveraged acquisition. In combination, they create the bid-ask spread that is freezing smaller-market M&A — and that the all-stock structure bypasses entirely.
Each of these forces is independently sufficient to disrupt a leveraged acquisition. In combination, they create the bid-ask spread that is freezing smaller-market M&A — and that the all-stock structure bypasses entirely.
Each of these forces is independently sufficient to disrupt a leveraged acquisition. In combination, they create the bid-ask spread that is freezing smaller-market M&A — and that the all-stock structure bypasses entirely.
01
01
Elevated Debt Service
Higher borrowing costs reduce the maximum price a debt-financed buyer can justify paying. More of the target's future earnings must be reserved for debt service rather than returns to the acquirer, compressing the viable deal range below seller expectations.
Higher borrowing costs reduce the maximum price a debt-financed buyer can justify paying. More of the target's future earnings must be reserved for debt service rather than returns to the acquirer, compressing the viable deal range below seller expectations.
02
02
Tighter Lender Underwriting
In a high-rate environment, lenders apply more stringent underwriting standards, narrower leverage ratios, and longer approval timelines. The process itself becomes a source of deal risk — not just deal cost — even before terms are agreed.
In a high-rate environment, lenders apply more stringent underwriting standards, narrower leverage ratios, and longer approval timelines. The process itself becomes a source of deal risk — not just deal cost — even before terms are agreed.
03
03
Financing Contingency Risk
Deals conditioned on debt financing carry a structural fragility that all-stock transactions do not. A shift in credit markets, a lender's credit committee, or a single covenant can kill a transaction at any point before close — regardless of how aligned buyer and seller are.
Deals conditioned on debt financing carry a structural fragility that all-stock transactions do not. A shift in credit markets, a lender's credit committee, or a single covenant can kill a transaction at any point before close — regardless of how aligned buyer and seller are.
04
04
Widening Bid-Ask Spread
Sellers hold firm on valuations anchored to intrinsic value. Debt-constrained buyers cannot support those prices with leveraged economics. The gap does not close through negotiation — it closes only when the structure changes, removing debt from the equation.
Sellers hold firm on valuations anchored to intrinsic value. Debt-constrained buyers cannot support those prices with leveraged economics. The gap does not close through negotiation — it closes only when the structure changes, removing debt from the equation.
Comparative Framework
All-Stock vs. Alternative Structures for
Mid-Market Companies
All-Stock vs. Alternative Structures for Mid-Market Companies
All-Stock vs. Alternative Structures for
Mid-Market Companies
Structure
Structure
Rate Dependency
Rate Dependency
Post-Close Debt
Post-Close Debt
Execution Certainty
Execution Certainty
Suitability
Suitability
All-Stock Merger
All-Stock Merger
None — structure is rate-agnostic
None — structure is rate-agnostic
None — no acquisition debt loaded onto target
None — no acquisition debt loaded onto target
High — no financing window required
High — no financing window required
Preferred
Preferred
Leveraged Buyout
Leveraged Buyout
High — viable only when credit is available and rates are manageable
High — viable only when credit is available and rates are manageable
Significant — target services acquisition debt from operating cash flows
Significant — target services acquisition debt from operating cash flows
Low — subject to lender approval and credit market conditions
Low — subject to lender approval and credit market conditions
Constrained
Constrained
Cash Acquisition
Cash Acquisition
Moderate — depends on acquirer's cost of capital and balance sheet
Moderate — depends on acquirer's cost of capital and balance sheet
Varies — depends on how acquirer funds the purchase
Varies — depends on how acquirer funds the purchase
Moderate — faster close but requires buyer's capital reserves
Moderate — faster close but requires buyer's capital reserves
Selective
Selective
Remain Listed (Standalone)
Remain Listed (Standalone)
Low direct dependency — but capital access constrained by market conditions
Low direct dependency — but capital access constrained by market conditions
None from M&A — but listing costs, compliance burden, and analyst neglect persist
None from M&A — but listing costs, compliance burden, and analyst neglect persist
N/A — no transaction certainty at all
N/A — no transaction certainty at all
Costly
Costly
Private Equity Recap
Private Equity Recap
High — PE returns depend on leverage and exit financing conditions
High — PE returns depend on leverage and exit financing conditions
Significant — recapitalisation typically loads the business with debt
Significant — recapitalisation typically loads the business with debt
Low-moderate — process-intensive with valuation compression risk
Low-moderate — process-intensive with valuation compression risk
Constrained
Constrained
Built for Durability,
Not the Cycle
$3.5 Trillion Waiting for Control
Built for Durability,
Not the Cycle
We built this structure deliberately. Not because it is clever, but because it is durable. It works in rate cycles up and down. It keeps the focus on what matters: the quality of the business and the long-term value of the combined platform.
The all-stock merger is not a workaround for a difficult environment. It is the structurally correct answer for a public company that wants to be valued on what it is actually worth.
The companies in Altuva's current target universe are not poorly managed in the conventional sense. Many are well-run businesses whose market prices simply do not reflect the underlying value of the platform. The structural disadvantage is not operational — it is financial. Their cost of remaining listed outweighs the benefit of the listing, and their access to growth capital is constrained by a market that has moved on.
The all-stock merger with Altuva is designed to be the mechanism that resolves that disadvantage. Management teams retain meaningful ownership in the combined entity. They gain access to a growing, compounding platform. They avoid the friction — financial and operational — of a leveraged transaction. And they close with certainty, because the structure does not depend on a financing window.
If you lead or advise a public company that is looking for a different kind of path forward, we would like to hear from you. Altuva Group is a NASDAQ-listed public holding company focused on acquiring undervalued public companies through all-stock mergers.
Sources & References
FinancialContent / MarketMinute. "The Great Divide: Inside the 'K-Shaped' Recovery of the 2026 M&A Landscape." markets.financialcontent.com, March 2026. Large-cap mergers structured as all-stock swaps to bypass high debt costs; Federal Reserve brought funds rate to 3.50%–3.75% before pausing in January 2026.
USC Business Law Digest / Koley Jessen. Research on interest rates and M&A. Higher borrowing costs increase default risk, tighten lender underwriting, and compress achievable deal prices for debt-dependent buyers.
Deloitte. "2026 M&A Trends Survey: A Tale of Two Markets." deloitte.com. Dual-market dynamic; large acquirers able to transact through complexity; dealmakers should focus on middle and smaller markets in 2026; improved rate predictability expected to support deal activity.
PwC. "Global M&A Industry Trends: 2026 Outlook." pwc.com. External estimates suggest between $5tn and $8tn required over next five years to fund AI technologies and enabling infrastructure; sources include BlackRock 2026 Investment Outlook and KKR Investment Insights.
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true value?
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What is your company's
true value?
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