Goldman Sachs Deck
Mental shortcut: an all-stock deal where the acquirer trades at 20x P/E and the target at 10x P/E — accretive or dilutive, and what's the general rule?
Model answer
Accretive. Compare earnings yields (the inverse of P/E): the acquirer's currency yields 1/20 = 5% while the target's earnings yield 1/10 = 10% — issuing a 5%-yield currency to buy a 10% yield adds…
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