Wall Street Prep

Quick Lesson: M&A Model (Accretion Dilution)

An important part of investment banking is understanding mergers and acquisitions (M&A). Within M&A, One of the core models investment banking analysts and associates have to build when analyzing an acquisition is the accretion/dilution model. The underlying purpose of such an analysis is to assess the impact of an acquisition on the acquirer’s expected future earnings per share (EPS).

Ready to Model?

The Excel file that goes with this lesson: Accretion dilution Excel model template

Part 1

Part 2


This is a brief introduction to the concepts and adjustments underlying accretion/dilution analysis and modeling. These are, of course, just a few of the many issues that come into play when building an accretion/dilution analysis. Other adjustments that we did not include include:

  1. Advanced Purchase Price Allocation concepts including deferred taxes and the treatment of in-process research & development
  2. Modeling asset sales, 338(h)(10) elections, and stock sales
  3. Modeling an Advanced Sources & Uses of Funds schedule
  4. Target debt considerations
  5. Calendarization and stub year challenges in Excel

Those concepts, along with many others required to build a full-scale M&A accretion/dilution model, are covered in Wall Street Prep's Premium Package.

Inline Feedbacks
View all comments

The Wall Street Prep Quicklesson Series

7 Free Financial Modeling Lessons

Get instant access to video lessons taught by experienced investment bankers. Learn financial statement modeling, DCF, M&A, LBO, Comps and Excel shortcuts.