M&A Accretion / Dilution Analyzer

Model whether buying this target grows or shrinks the acquirer's earnings per share, once the purchase price, financing mix and synergies are all priced in.

Reading This Tool

How To Use This Calculator

Start with the acquirer's own financials, then add what's being paid for the target and how it's being financed.

Sliding more of the deal onto stock means issuing more new shares, which dilutes existing holders; sliding more onto cash means more new debt and after-tax interest expense instead. The deal is accretive when pro forma EPS ends up higher than the acquirer's standalone EPS, dilutive when it ends up lower.

Your Inputs

Acquirer Net Income $50,000,000

Acquirer Shares Outstanding 40,000,000

Acquirer Share Price $40

Target Net Income $10,000,000

Total Purchase Price (Deal Value) $150,000,000

Financed With Stock 50%

Annual Pre-Tax Cost Synergies $5,000,000

Interest Rate On New Acquisition Debt 6.0%

Combined Tax Rate 26.5%

The remainder of the deal value not financed with stock is assumed funded with new debt at the rate above. Synergies are assumed fully realized in year one, real integrations usually phase them in over 12-24 months.

Year-One Pro Forma Result

Acquirer Standalone EPS

$0.00

Pro Forma Combined EPS

$0.00

Accretion / (Dilution)

0.00%

Implied Purchase Multiple

0.0x Target NI

New Shares Issued

Acquirer Standalone EPS vs. Pro Forma Combined EPS

Standalone EPS Pro Forma EPS

This models a simplified year-one, all-else-equal pro forma. It excludes transaction fees, purchase accounting adjustments (goodwill, intangible amortization, write-ups), and any change in the combined entity's trading multiple, all of which matter in a real fairness opinion.

Now find out what the target is actually worth.

Continue to the DCF Valuation Model →