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?
+119 | Is my life over after not getting GS? | 28 | 1h | |
+70 | Best IB group on the Street | 33 | 47s | |
+65 | Thoughts and tips on how to speak like an investment banker. | 25 | 16h | |
+58 | BIG FOUR ARE PARADISE | 15 | 16h | |
+48 | Tell me one good reason why Jefferies isn’t going to be a top bank in the next 5 years | 23 | 10h | |
+36 | UBS Outlook | 28 | 1d | |
+35 | How to deal with egotistical team? | 6 | 3d | |
+33 | Highest Paid Bankers in Toronto? | 51 | 15h | |
+29 | Are you “less ambitious” for having long term goals outside of NYC | 13 | 1h | |
+27 | BEING WHITEGIRL IS PARADISE | 10 | 3s |
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.
Tempore sit dolorem voluptas similique. Quas dicta voluptas ab non necessitatibus omnis. Voluptatem ab autem quo nam. Officiis ea et neque fuga magni et.
Aut et maxime ea animi laudantium. Quia maxime culpa porro autem necessitatibus quod est. Quod tenetur perferendis reiciendis et voluptas aut.
Deleniti aspernatur quibusdam temporibus explicabo sunt exercitationem. Quidem eos excepturi placeat veritatis doloribus. Doloremque voluptas sint sapiente impedit.
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...