Question:

In an all-stock deal, how can you quickly tell if a deal will be accretive or dilutive?

Bookmark
Remove Bookmark
Hide answer
Show answer
Answer hidden.

Answer:

In an all-stock deal, the deal will be accretive as long as the buyer has a higher P/E multiple than the seller.

This is because the buyer is paying less for earnings (net income) than what the market values their own earnings at.

Other

Merger Model

Merger Model

Why would an acquisition be dilutive?

Merger Model

Why does goodwill get created in an acquisition?

Merger Model

Is there a shortcut to determine whether a transaction is accretive or dilutive to shareholders?

Merger Model

What are some reasons for why a company would want to acquire another company?

Merger Model

Walk me through a basic merger model

Merger Model

Why would a strategic acquirer typically be willing to pay more for a company than a private equity firm?

Merger Model

What is the difference between a merger and an acquisition?

Merger Model

A company with a higher P/E multiple acquires one with a lower P/E multiple. Is this deal accretive or dilutive?

Merger Model

What are synergies? What kinds of synergies are there?

The ultimate IB interview study guide.

FAQCategoriesAll questionsFeedbackAdd a question
©2022 EBITDOG