Accretion/Dilution Analysis Examples - IB Interview Questions

Accretion/(dilution) analysis measures the effects of a transaction on a potential acquirer’s earnings, assuming a given financing structure. It centers on comparing the acquirer’s earnings per share (EPS) pro forma for the transaction versus on a standalone basis. If the pro forma combined EPS is lower than the acquirer’s standalone EPS, the transaction is said to be dilutive; conversely, if the pro forma EPS is higher, the transaction is said to be accretive. We cover 3 practice questions and provide an overview of the exchange ratio calculation and the theory behind why increasing equity in deal consideration results in lower pro forma EPS. If you have any other questions, please comment below. If you enjoyed the video and found it helpful, please like and subscribe to FinanceKid for more videos soon! For those who may be interested in finance and investing, I suggest you check out my Seeking Alpha profile where I write about the market and different investment opportunities. I conduct a full analysis on companies and countries while also commenting on relevant news stories. http://seekingalpha.com/author/robert...