A capital structure argument (that leverage increases value)is often used to show that a large acquisition price premium is justified even though the target has little debt before the acquisition.

Capital Structure

Capital structure is the mixture of a company's long-term debt, specific short-term debt, common equity, and preferred equity which finance its overall operations and growth.

Leverage

Taking on debt to magnify the prospective profits of an investing activity.

Acquisition Price Premium

This refers to the amount by which the purchase price of a company exceeds the pre-acquisition market value of its shares, often reflecting the buyer's estimate of the target's intrinsic value or synergies to be realized.