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The Daily Capital
FINANCE CAREERS · Lesson 82

Accretion and dilution: the merger question that trips up finalists

Daily Desk · Editorial5 min read
Accretive is not the same as good. A company can raise its EPS by borrowing to buy almost anything cheap, and destroy value doing it.

You are in a third round and the banker asks: Company A buys Company B for $1 billion in cash, funded entirely with debt at 6%. Is it accretive? The candidate who reaches for a model loses. The candidate who does one comparison out loud, gets the sign right, and names what could flip it gets the offer.

— Educational, not financial advice.