M&A & Merger Models
Why is a cash/debt-funded acquisition usually more likely to be accretive than an all-stock deal, all else equal?
Model answer
Because after-tax debt is typically the cheapest form of financing. Cash sitting on the balance sheet earns a very low after-tax yield, and new debt carries a low after-tax interest rate (interest is…
The full, human-reviewed answer is in the bank.
Sign up free and Daily 10 serves you 10 questions a day from all 1,500+ — or go Pro for unlimited reps.
More from M&A & Merger Models
- What makes an acquisition accretive or dilutive to EPS?
- An all-cash deal: when is it accretive?
- What are synergies and what are the two types?
- What's the difference between a strategic buyer and a financial buyer?
- What does it mean for an acquisition to be accretive or dilutive?
- Walk me through how you calculate accretion/dilution at a high level.