Accretion

Investment Banking Glossary

Increase in acquirer pro forma EPS from a transaction: Accretion = (PF EPS - Standalone EPS)/(Standalone EPS). Rule of thumb: in all-stock deals, accretive when acquirer P/E > target P/E; in cash/debt deals, accretive when the target's earnings yield exceeds the acquirer's after-tax cost of acquisition debt.

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