One division problem: pro forma net income over pro forma share count, against standalone EPS. Every consideration structure changes the numerator, the denominator, or both, and each has a closed-form breakeven that gives the answer before a model is built. Every input is encoded in the URL.
Target net income is assumed already re-based to the acquirer's tax rate. Cash funded from the balance sheet costs the after-tax yield foregone rather than the cost of debt. Cost to achieve is a one-time item and is excluded from run-rate pro forma EPS by construction; it is reported separately below as an after-tax amount and as a payback against after-tax synergies.
Under a fixed exchange ratio the target's holders bear the acquirer's price risk between signing and closing; under a floating ratio the acquirer bears the dilution risk instead.
The mixed case is a harmonic weighting of the component conditions, not an arithmetic one, because each source contributes a cost per unit of price rather than a multiple. Set synergies and amortisation to zero to see the pure rule; the maximum EPS-neutral price reported above is solved numerically over the full expression, so it also holds when they are not zero.
Breakeven synergies are the most testable number in an accretion analysis, because they convert a return claim into an operating claim. Expressed as a share of the target's EBITDA or cost base they become falsifiable; the raw amount hides the scale.
Goodwill is not amortised; only identifiable intangibles with finite lives are, so the allocation between the two sets the size of the drag. Cash EPS is a fair adjustment for a charge with no cash effect and an unfair one when it is used to make an expensive deal look cheap.
Acquirer: net income 500.0, 250.0 diluted shares, so EPS 2.00; share price 30.00, so P/E 15.0x. Target: net income 100.0, 100.0 shares, so EPS 1.00; offer 24.00 per share, so offer equity value 2,400.0 and offer P/E 24.0x. Tax 25 percent. New debt at 6.0 percent pre-tax, so 4.50 percent after tax. Run-rate pre-tax synergies where used are 40.0, which is 30.0 after tax. These are the defaults above, with synergies at zero.
| Consideration | New shares | Pro forma shares | After-tax interest | After-tax synergies | Pro forma net income | Pro forma EPS | Accretion |
|---|---|---|---|---|---|---|---|
| 100% stock | 80.0 | 330.0 | 0.00 | 0.0 | 600.0 | 1.8182 | -9.09% |
| 100% stock + synergies | 80.0 | 330.0 | 0.00 | 30.0 | 630.0 | 1.9091 | -4.55% |
| 50% cash / 50% stock | 40.0 | 290.0 | 54.00 | 0.0 | 546.0 | 1.8828 | -5.86% |
| 50/50 + synergies | 40.0 | 290.0 | 54.00 | 30.0 | 576.0 | 1.9862 | -0.69% |
| 100% cash (debt funded) | 0.0 | 250.0 | 108.00 | 0.0 | 492.0 | 1.9680 | -1.60% |
| 100% cash + synergies | 0.0 | 250.0 | 108.00 | 30.0 | 522.0 | 2.0880 | +4.40% |
Every parameter is optional; omitted parameters take the worked-case default. Percentages are entered as numbers, so 6 means 6 percent. All computation happens in the browser and no request leaves the page.
| Parameter | Meaning | Default |
|---|---|---|
acqni | Acquirer standalone net income to common | 500 |
acqsh | Acquirer fully diluted shares | 250 |
acqpx | Acquirer share price; sets the P/E and the stock issue price | 30 |
tgtni | Target net income, re-based to the acquirer's tax rate | 100 |
tgtsh | Target fully diluted shares at the offer price | 100 |
offer | Offer price per target share; offer equity value is offer x tgtsh | 24 |
cashpct | Cash share of the consideration, percent; the remainder is stock at acqpx | 100 |
rate | Pre-tax cost of the incremental debt, percent | 6 |
cashonhand | Amount of the cash consideration funded from existing cash | 0 |
cashyield | Pre-tax yield foregone on that cash, percent | 3 |
tax | Marginal tax rate, percent | 25 |
synergies | Run-rate pre-tax synergies | 0 |
cta | One-time pre-tax cost to achieve those synergies; excluded from run-rate EPS | 0 |
amort | Annual pre-tax intangible amortisation under purchase accounting | 0 |
All-stock at a 24.0x offer P/E:https://m-a.wiki/calc/accretion/?acqni=500&acqsh=250&acqpx=30&tgtni=100&tgtsh=100&offer=24&cashpct=0&tax=25
The same price funded entirely with 6 percent debt, plus 40.0 of run-rate synergies:https://m-a.wiki/calc/accretion/?acqni=500&acqsh=250&acqpx=30&tgtni=100&tgtsh=100&offer=24&cashpct=100&rate=6&tax=25&synergies=40