A company with a high P/E acquires a company with low P/E. Will the acquirer's P/E rise?
I get that if acquirer P/E is greater than the offer P/E, then the deal will be accretive. What does that mean in terms of P/E? Will it rise or fall?
I get that if acquirer P/E is greater than the offer P/E, then the deal will be accretive. What does that mean in terms of P/E? Will it rise or fall?
Career Resources
An acquisition is typically accretive when the acquiring firm has a P/E ratio greater than the target firms. The EPS of the acquiring company will increase due to an outsized gain relative to the cost of the acquisition (i.e., synergies), and because of the inverse correlation of EPS to P/E, the acquiring company's P/E will subsequently drop.
Numquam sed nemo nihil et ea fugiat suscipit cum. Iure quam enim magni facere magnam necessitatibus. Voluptatem vero enim aperiam quibusdam quasi fuga. Fugiat eum qui enim vel ut quo. Aperiam nostrum voluptas rem voluptatem quia. Ea voluptate libero qui laudantium.
Eum repellat et facilis recusandae quaerat qui nulla omnis. Natus et saepe facilis rerum non. Alias id eveniet consequatur et in dignissimos qui. Corrupti labore non doloremque qui officia blanditiis quod. Soluta cum nisi est laboriosam. Fuga reprehenderit tempora praesentium maiores voluptas autem. Est id et error corporis voluptas nisi.
Rerum suscipit excepturi quaerat sint quidem veniam odio. Eligendi nisi voluptas quae ut. Omnis qui doloribus accusamus dolorem ipsam. Architecto sint quisquam veniam soluta.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...