Series 79: Accretion/dilution Analysis

Taken from our FINRA Investment Banking Exam

Definition of the term Accretion/dilution Analysis...

a type of analysis used to predict the effect of a proposed merger or acquisition on the buyer’s EPS. The combined companies’ pro forma net income is calculated, which is divided by the number of shares there will be. The result is an EPS that may be compared to the buyer’s stand-alone EPS.

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