This thesis aims to determine to what extend financing costs influence the payment method of mergers & acquisitions (M&A;) in Europe. This study contributes to the literature by examining how macro-economic factors impact the payment method in M&A.; Evidence indicates that lower interest rates stimulate cash payments in M&A; financing decisions. Furthermore, the cost of equity relative to debt decreases when the economy grows, resulting in a preference for stock payment when GDP growth rate increases. In cross-border (foreign) acquisitions the interest rates seem to have less effect on cash payments. For GDP growth rate the negative correlation becomes stronger, indicating the likelihood of cash payments