Yes.
Accretion Dilution Tool
Free
This is a simple accretion dilution model template Excel model to quickly calculate if an acquisition will create value for a public company (or not).
- Excel model
- Public market analysis
- Example data
509
happy users
What
What Is an Accretion Dilution Tool?
An Accretion Dilution model is a financial tool used in the context of merger and acquisition (M&A) deals. It quantitatively assesses the impact of an acquisition on a company’s earnings per share (EPS). By considering factors such as financing structure, synergies, costs, and other deal-related variables, the model calculates whether the acquisition will result in an increase (accretion) or decrease (dilution) in EPS for the acquiring company. This analysis aids in decision-making, valuation, and communication with stakeholders, providing a clear and numerical basis to understand the potential financial effect of a merger or acquisition.
Accretion/dilution analysis tries to answer an important question when it comes to corporate acquisitions – does the deal create or destroy value for the shareholders of the buyer? It shows this numerically.
The accretion/dilution analysis is typically undertaken by analysts at an investment bank (and presented by the MDs), or works in a corporate development team. In more nerdy terms, it’s a type of M&A financial modelling performed during the pre-deal phase to evaluate the effect of the transaction on shareholder value and to check whether EPS for buying shareholders will increase or decrease post-deal.
Um. EPS? That’s your earnings per share. It’s a really critical number public execs, analysts and shareholders track.
Like everything in life, it’s not theoretically hard to figure out if you have the right tools and the inputs to hand. You can make this as complicated or simple as you like. I like simplicity.
This is a simple model I did years back for fun whilst making a template to look at the effect of the SGX (Singapore Stock Exchange) acquiring the ASX (Australian Stock Exchange). It was in the news in 2010, so it seemed like something contemporary to base the template on.
who
Who Needs an Accretion Dilution Tool?
Everyone in startup-related land needs to know about this topic. So whether you are a founder, investor or advisor, why not have a little play with this!
Details
What Does the Tool Look Like?
Here are a few images to have a little gander at for your viewing pleasure.
Need
Why Do You Need an Accretion Dilution Tool?
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1
Assessing Value Impact
- M&A deals involve combining two companies, and one major concern is whether the deal will create or destroy shareholder value.
- The Accretion Dilution model helps to quantitatively evaluate how the deal will impact the acquiring company’s earnings per share (EPS), which is a key measure of value for shareholders.
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2
EPS Impact
- EPS reflects a company’s profitability on a per-share basis.
- The Accretion Dilution model helps calculate the potential change in EPS after the merger. If the EPS increases post-merger, the deal is said to be accretive; if it decreases, it’s dilutive.
- This information is crucial for both company management and investors.
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3
Factoring in Financing
- The model considers the financing structure of the deal, including the mix of cash, debt, and stock used to fund the acquisition.
- The cost of financing affects the overall financial impact of the deal on the acquiring company’s EPS.
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4
Synergies and Costs
- M&A deals are often justified by the potential synergies between the two companies, such as cost savings, increased market share, or complementary capabilities.
- The model incorporates these expected synergies, as well as any associated integration costs.
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5
Comparative Analysis
- The Accretion Dilution model provides a way to compare different acquisition scenarios or potential targets.
- By inputting the financials of various targets, acquirers can identify which deals are likely to enhance their EPS and which might dilute it.
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6
Decision Making
- The model aids in the decision-making process by providing a quantitative basis to assess the financial implications of the deal.
- This helps management and boards make informed choices about whether to proceed with the acquisition, negotiate better terms, or explore alternatives.
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7
Investor Communication
- Shareholders and investors want to understand how a merger or acquisition will affect their investment.
- The model’s output, showing the potential change in EPS, can be used to communicate the financial impact to stakeholders in a clear and transparent manner.
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8
Negotiation Tool
- During negotiations, both the acquiring and target companies can use the model to estimate the impact of different deal terms on EPS.
- This information can be instrumental in reaching mutually agreeable terms.
features
What Can the Model Do?
These are some of the features in the model.
Range of Values
See how a deal can be structured and might perform
- Range of values analysis
- 13 scenarios
See the Numbers Used
See how the model is filled in
- P&L data
- Separately in 2 sheets
Table on Different Sheet
Learn how tables can be on another sheet
- Normally tables have to be on the same sheet as the inputs
- I invented a way around this. Learn how!
- 7 tables
Need
Why Is My Tool Worth Getting
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1
I Make Cool Things (and am capable)
- There is a lot of blah around by people who aren’t terribly good at Excel/PowerPoint etc
- You’ll see the attention to detail and actual thought put into what I gift you (so you aren’t wasting your time)
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2
My Free Tools Are Better Than What Some Charge For
- I only made tools because I couldn’t find anything I would use myself
- Even if you don’t ‘actually need the tool’, the point is to teach you concepts you can apply
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3
I Don’t Have a Hardcore Marketing Funnel
- I make tools to actually help founders
- You aren’t going to be hounded with emails to get you to buy things
- Whilst I do sell some stuff, seeing the quality I give for free is way better marketing than using fancy words to convince you
video time
Watch a Video on the Tool
There is no video HERE.
read more
Read the Full Blog
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FAQs
Check the FAQs if you are having issues. Don’t message me if “I can’t download the file”.
Is this free?
How do I download?
Fill in your name and email in the submission form and it will be emailed to you.
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- Check you input your email accurately
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Can I get consulting to use the file?
Yes. You can book a consulting call here:
I have feedback to improve
How do I open the file?
When you press download in an email from me, it normally saves to your Downloads folder.
So go there first to find the file.
I normally have to ZIP the file so it will work with SaaS automation systems.
So get WinZip, WinRAR, or use whatever Mac/PC offers these days. Unzip the file (Right click and press “uncompress” etc). If you don’t know how to do this, then use Google.
Once you uncompress, the ZIP file will remain, and you will see a new file (sort the download folder by date modified if confused).
I assure you that everything I provide works, so if you can’t access it, it’s a ‘you’ problem.
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