Accretion

What is Accretion?

Author: Andy Yan
Andy Yan
Andy Yan
Investment Banking | Corporate Development

Before deciding to pursue his MBA, Andy previously spent two years at Credit Suisse in Investment Banking, primarily working on M&A and IPO transactions. Prior to joining Credit Suisse, Andy was a Business Analyst Intern for Capital One and worked as an associate for Cambridge Realty Capital Companies.

Andy graduated from University of Chicago with a Bachelor of Arts in Economics and Statistics and is currently an MBA candidate at The University of Chicago Booth School of Business with a concentration in Analytical Finance.

Reviewed By: Adin Lykken
Adin Lykken
Adin Lykken
Consulting | Private Equity

Currently, Adin is an associate at Berkshire Partners, an $16B middle-market private equity fund. Prior to joining Berkshire Partners, Adin worked for just over three years at The Boston Consulting Group as an associate and consultant and previously interned for the Federal Reserve Board and the U.S. Senate.

Adin graduated from Yale University, Magna Cum Claude, with a Bachelor of Arts Degree in Economics.

Last Updated:April 12, 2022

Accretion is a financial concept to represent an increase in value and can apply to either a transaction or a bond. For both, it refers to the fact that value is created purely on paper. In a transaction, accretion is the increase in Earnings Per Share after a merger or acquisition has taken place. If the Earnings Per Share increases, then the transaction is seen as being a good one. The opposite of accretion is dilution. For a bond, accretion is the increase in the bond price between time of trade and maturity. All bonds mature at par value (100) so if the bond were bought for 95, the accretion on the bond at maturity would be 5.

 

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