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What is Accretion/Dilution Analysis?

When one company acquires another, the combined entity’s earnings per share (EPS) will either go up (accretive) or go down (dilutive) compared to the acquirer’s standalone EPS. This analysis — called accretion/dilution or merger consequences — is one of the most important analyses in M&A because it directly answers the question: “Will this deal make the acquirer’s shareholders richer or poorer on a per-share basis?” A deal is accretive if the target’s earnings contribution (plus synergies, minus financing costs) exceeds the cost of the acquisition. It is dilutive if the opposite is true. Most boards of directors will not approve a deal that is materially dilutive without a compelling strategic rationale and a clear path to becoming accretive within 2-3 years.
Accretion/dilution analysis is performed on virtually every M&A transaction. It is required in fairness opinions, board presentations, and proxy statements. Investment banking analysts at every bulge bracket and middle market firm build these models routinely.

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Command Syntax

/merger-model [acquirer] acquiring [target]
If acquirer and target are not provided, the command asks for deal details.

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What It Produces

An Excel workbook with:
  • Assumptions tab (deal terms, financing, synergies)
  • Sources and uses of funds
  • Pro forma income statement
  • Accretion/dilution summary (Year 1-3)
  • Sensitivity tables (synergies vs. premium, cash/stock mix)
  • Breakeven synergy analysis
Plus a one-page merger consequences summary for pitch book use.

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How to Customize

  • To match your firm’s merger model template, edit the merger-model skill file
  • To integrate with your firm’s Excel model library, configure file access in .mcp.json
  • merger-model skill — the skill loaded by this command with full step-by-step methodology