A Company With A Higher P/e Acquires One With A Lower P/e – Is This

1.	A Company With A Higher P/e Acquires One With A Lower P/e – Is This Accretive Or Dilutive?
Answer» You can’t tell unless you also know that it’s an all-stock deal. If it’s an all-cash or all-debt deal, the P/E multiples of the buyer and seller don’t matter because no stock is being ISSUED. SURE, generally getting more EARNINGS for less is good and is more likely to be ACCRETIVE but there’s no hard-and-fast rule unless it’s an all-stock deal. You can’t tell unless you also know that it’s an all-stock deal. If it’s an all-cash or all-debt deal, the P/E multiples of the buyer and seller don’t matter because no stock is being issued. Sure, generally getting more earnings for less is good and is more likely to be accretive but there’s no hard-and-fast rule unless it’s an all-stock deal.

A Company With A Higher P/e Acquires One With A Lower P/e – Is This Accretive Or Dilutive?

Answer»

You can’t tell unless you also know that it’s an all-stock deal. If it’s an all-cash or all-debt deal, the P/E multiples of the buyer and seller don’t matter because no stock is being ISSUED. SURE, generally getting more EARNINGS for less is good and is more likely to be ACCRETIVE but there’s no hard-and-fast rule unless it’s an all-stock deal.

You can’t tell unless you also know that it’s an all-stock deal. If it’s an all-cash or all-debt deal, the P/E multiples of the buyer and seller don’t matter because no stock is being issued. Sure, generally getting more earnings for less is good and is more likely to be accretive but there’s no hard-and-fast rule unless it’s an all-stock deal.

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