medium · Investment Banking ma-lbo
How does an increase in the tax rate affect the accretion of an all-debt acquisition?
- It only affects the balance sheet's goodwill line item, not the reported EPS figure at all.
- It has no impact whatsoever on the resulting accretion or dilution outcome of the overall transaction.
- It generally makes the deal more accretive because the interest tax shield becomes more valuable.
- It makes the deal more dilutive because the higher rate reduces the target's net income contribution.
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