Accretion / Dilution Calculator

Test whether an acquisition raises or lowers the acquirer's pro-forma EPS.

Accretive

+4.6%

Pro-forma EPS $5.23 vs standalone $5.00

Acquirer

Acquirer EPS ($)

Acquirer shares (M)

Acquirer share price ($)

Target & deal

Target net income ($M)

Purchase price — equity ($M)

Paid in stock

0 to 100%

Run-rate synergies — pre-tax ($M)

Financing

Cost of cash / new debt

Tax rate

0 to 100%

With your numbers

Pro-forma EPS

$538.8M ÷ 103M = $5.23

Accretion

$5.23 ÷ $5.00 − 1 = +4.6%

Acquirer net income

$500M

Target net income

$50M

After-tax synergies

$0M

Less: after-tax financing cost

$11.3M

Pro-forma net income

$538.8M

New shares issued

Pro-forma shares

103M

Pro-forma EPS

$5.23

Accretion / (dilution)

+4.6%

The formula

Pro-forma EPS is combined net income, adjusted for financing and synergies, over the pro-forma share count:

\text{Pro-forma EPS} = \frac{\text{Combined Net Income} \pm \text{Adjustments}}{\text{Pro-forma Shares}}

The adjustments are the after-tax cost of the cash and debt used, netted against after-tax synergies, where $t$ is the tax rate:

\text{Adjustments} = \text{Synergies} \times (1 - t) - \text{Cash/Debt} \times \text{Rate} \times (1 - t)

The stock portion of the price issues new acquirer shares at its share price:

\text{New Shares} = \frac{\text{Stock Consideration}}{\text{Acquirer Share Price}}

The deal is accretive when pro-forma EPS beats standalone EPS, dilutive when it falls short.

Or browse the valuation & M&A question bank.

Frequently Asked Questions

When is an all-stock deal accretive?

Why is cash or debt often more accretive than stock?

How do synergies affect accretion / dilution?

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