merger-model

Build accretion/dilution analysis for M&A transactions. Models pro forma EPS impact, synergy sensitivities, and purchase price allocation. Use when evaluating a potential acquisition, preparing merger consequences analysis for a pitch, or advising on deal terms. Triggers on "merger model", "accretion dilution", "M&A model", "pro forma EPS", "merger consequences", or "deal impact analysis".

Merger Model

Workflow

Step 1: Gather Inputs

Acquirer:

Company name, current share price, shares outstanding
LTM and NTM EPS (GAAP and adjusted)
P/E multiple
Pre-tax cost of debt, tax rate
Cash on balance sheet, existing debt

Target:

Company name, current share price, shares outstanding (if public)
LTM and NTM EPS or net income
Enterprise value or equity value

Deal Terms:

Offer price per share (or premium to current)
Consideration mix: % cash vs. % stock
New debt raised to fund cash portion
Expected synergies (revenue and cost) and phase-in timeline
Transaction fees and financing costs
Expected close date

Step 2: Purchase Price Analysis

Item	Value
Offer price per share
Premium to current
Equity value
Plus: net debt assumed
Enterprise value
EV / EBITDA implied
P/E implied

Step 3: Sources & Uses

Sources	$	Uses	$
New debt		Equity purchase price
Cash on hand		Refinance target debt
New equity issued		Transaction fees
		Financing fees
Total		Total

Step 4: Pro Forma EPS (Accretion / Dilution)

Calculate year-by-year (Year 1-3):

	Standalone	Pro Forma	Accretion/(Dilution)
Acquirer net income
Target net income
Synergies (after tax)
Foregone interest on cash (after tax)
New debt interest (after tax)
Intangible amortization (after tax)
Pro forma net income
Pro forma shares
Pro forma EPS
Accretion / (Dilution) %

Step 5: Sensitivity Analysis

Accretion/Dilution vs. Synergies and Offer Premium:

	$0M syn	$25M syn	$50M syn	$75M syn	$100M syn
15% premium
20% premium
25% premium
30% premium

Accretion/Dilution vs. Cash/Stock Mix:

	100% cash	75/25	50/50	25/75	100% stock
Year 1
Year 2

Step 6: Breakeven Synergies

Calculate the minimum synergies needed for the deal to be EPS-neutral in Year 1.

Step 7: Output

Excel workbook with:
- Assumptions tab
- Sources & uses
- Pro forma income statement
- Accretion/dilution summary
- Sensitivity tables
- Breakeven analysis
One-page merger consequences summary for pitch book

Important Notes

Always show both GAAP and adjusted (cash) EPS where relevant
Stock deals: use acquirer's current price for exchange ratio, note dilution from new shares
Include purchase price allocation — goodwill and intangible amortization matter for GAAP EPS
Synergy phase-in is critical — Year 1 is often only 25-50% of run-rate synergies
Don't forget foregone interest income on cash used and new interest expense on debt raised
Tax rate on synergies and interest adjustments should match the acquirer's marginal rate