Net Assets and EPS

I had an interview with a small advisory firm for corporate finance dep. The question was:

Company A acquires Company B with discount to its net assets. How does the acquisition impact consolidated BS and EPS. What changes if it was acquired with premium?

Can someone help me answer this?

I understand that if company B purchased with premium then the goodwill should be recorded on asset side of BS. In case of a discount, I guess we could add some extra amortization. Not sure how both cases impact EPS.

WSO Elite Modeling Package

  • 6 courses to mastery: Excel, Financial Statement, LBO, M&A, Valuation and DCF
  • Elite instructors from top BB investment banks and private equity megafunds
  • Includes Company DB + Video Library Access (1 year)

Comments (2)

Start Discussion

Total Avg Compensation

June 2021 Investment Banking

  • Director/MD (9) $911
  • Vice President (35) $364
  • Associates (204) $233
  • 2nd Year Analyst (115) $151
  • Intern/Summer Associate (97) $145
  • 3rd+ Year Analyst (27) $145
  • 1st Year Analyst (421) $131
  • Intern/Summer Analyst (340) $82