M&A modeling final EXAM
LATEST VERSION 2025
QUESTIONS AND CORRECT
DETAILED ANSWERS (VERIFIED
ANSWERS) |ALREADY GRADED A
Save
Terms in this set (86)
, An accretive deal in an all-stock
transaction occurs when the
earnings per share (EPS) of the
acquiring company increases after
the merger. This typically happens
when the acquiring company's
What is an price-to-earnings (P/E) ratio is
accretive deal higher than that of the target
in an all-stock company, allowing the combined
transaction? entity to generate more earnings
per share than the acquirer had
prior to the deal. Accretive deals
are generally viewed favorably by
investors as they indicate that the
acquisition is expected to enhance
shareholder value.
, In an all-stock deal, the accretion
or dilution is determined by
comparing the pro forma earnings
per share (EPS) of the combined
company to the standalone EPS of
the acquiring company. If the
combined EPS is greater than the
pre-deal acquirer, the deal is
How do you
accretive. A simple formula
determine
calculates this for all-stock deals
whether an all-
by comparing the price-to-
stock deal is
earnings (P/E) ratios of the
accretive or
acquiring and target companies. If
dilutive?
the acquirer's P/E ratio is higher
than the target's P/E ratio, the
transaction is accretive, meaning
the acquirer's EPS will increase.
Conversely, if the acquirer's P/E
ratio is lower than the target's, the
deal is dilutive, resulting in a
decrease in the acquirer's EPS.
, In an all-stock deal, the relative
size of the acquirer's and target's
net income affects accretion or
How does the dilution based on the proportion
relative size of of new shares issued. If the target's
the acquirer's net income is smaller relative to
and target's net the acquirer's, the deal is more
income affect likely to be accretive because the
accretion/diluti additional earnings outweigh the
on in an all- dilution. Conversely, if the target's
stock deal? net income is larger, the deal can
be dilutive if the acquirer issues a
significant number of shares,
reducing EPS.
LATEST VERSION 2025
QUESTIONS AND CORRECT
DETAILED ANSWERS (VERIFIED
ANSWERS) |ALREADY GRADED A
Save
Terms in this set (86)
, An accretive deal in an all-stock
transaction occurs when the
earnings per share (EPS) of the
acquiring company increases after
the merger. This typically happens
when the acquiring company's
What is an price-to-earnings (P/E) ratio is
accretive deal higher than that of the target
in an all-stock company, allowing the combined
transaction? entity to generate more earnings
per share than the acquirer had
prior to the deal. Accretive deals
are generally viewed favorably by
investors as they indicate that the
acquisition is expected to enhance
shareholder value.
, In an all-stock deal, the accretion
or dilution is determined by
comparing the pro forma earnings
per share (EPS) of the combined
company to the standalone EPS of
the acquiring company. If the
combined EPS is greater than the
pre-deal acquirer, the deal is
How do you
accretive. A simple formula
determine
calculates this for all-stock deals
whether an all-
by comparing the price-to-
stock deal is
earnings (P/E) ratios of the
accretive or
acquiring and target companies. If
dilutive?
the acquirer's P/E ratio is higher
than the target's P/E ratio, the
transaction is accretive, meaning
the acquirer's EPS will increase.
Conversely, if the acquirer's P/E
ratio is lower than the target's, the
deal is dilutive, resulting in a
decrease in the acquirer's EPS.
, In an all-stock deal, the relative
size of the acquirer's and target's
net income affects accretion or
How does the dilution based on the proportion
relative size of of new shares issued. If the target's
the acquirer's net income is smaller relative to
and target's net the acquirer's, the deal is more
income affect likely to be accretive because the
accretion/diluti additional earnings outweigh the
on in an all- dilution. Conversely, if the target's
stock deal? net income is larger, the deal can
be dilutive if the acquirer issues a
significant number of shares,
reducing EPS.
