medium · Investment Banking ma-lbo
If an all-stock deal is accretive, what is the impact on the 'Earnings per Dollar Spent'?
- The earnings per dollar spent always decreases in every stock-for-stock merger transaction.
- The acquirer is buying more earnings per dollar of stock issued than its current shares represent.
- There is no real 'spend' in an all-stock deal, since no cash changes hands between the two parties.
- The acquirer is buying strictly less earnings per dollar of stock issued than its own current shares represent.
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