We’ve shown how to calculate EPS accretion / dilution above.
How to calculate accretion / dilutionĮPS Accretion / (Dilution) = (Pro Forma EPS - Standalone EPS) / Standalone EPSĮPS Accretion / (Dilution) = (1.25 - 1.00) / 1.00 Why per-share metrics only? We’ll discuss below. For example, when evaluating MLP mergers, you might look at the projected accretion / dilution for LP distributions. But it’s not exclusive to EPS - the concept can be applied to any per-share financial metric. Generally, it’s used to evaluate the projected change in EPS ( Earnings Per Share) resulting from a merger or acquisition.
How much will some per-share financial metric change as a result of a transaction? This article will introduce the concept of accretion / dilution - how to calulate it and when / why it’s used in financial analysis. I think the jargon can make it intimidating at first. Accretion / dilution was one of the most difficult finance concepts for me to understand when I was starting out.