During my tenure as an Investment Analyst at Venture Capital Co., I regularly engaged in accretion/dilution analysis as part of our due diligence for potential M&A activity. This analysis is critical, providing essential insights into whether a proposed deal would be accretive or dilutive to the acquirer's earnings per share.
One noteworthy case was our proposed acquisition of Tech Titans Inc. Using financial modeling tools such as Excel, and leveraging financial data from Bloomberg Terminal, we created pro forma income statements that simulated the financial state of our company post-acquisition.
Our analysis showed that the deal, though it seemed favorable at first glance, would be dilutive to our earnings per share. This insight was crucial, leading our team to renegotiate the deal terms to make the acquisition financially viable. Ultimately, the recalibrated deal had a neutral effect on our EPS, maintaining our financial stability while securing strategic advantages.