Mistakes in M&A accretion/dilution

Question

I’ve practiced a lot of accretion/dilution models, but I still find myself misapplying synergies, forgetting to adjust for financing costs, or using the wrong share count assumptions. I know conceptually how it works, but putting it together quickly and error-free is a struggle. Any tips on how to better structure or learn to stress-test my own math in these situations?

Answer 1

One thing that helps is building a clean, modular structure in your model, so synergies, financing, and share count assumptions are clearly separated. That makes it easier to spot errors. I’d also recommend checking sensitivities or toggling key assumptions. That way, you can stress-test your logic and catch inconsistencies early.

Lastly, don’t underestimate repetition. The more deals you model, the more intuitive it becomes.

Rita

Answer 2

Totally normal. accretion/dilution models are prone to small mistakes that can throw off results. A few tips:

Use a checklist structure: walk through synergies, deal financing (debt/equity mix, interest, fees), pro forma share count, and new net income step by step.
Sense-check each input: e.g., does the synergy margin make sense? Are you double-counting cost savings?
Build in sanity checks—like calculating EPS both pre- and post-deal separately.
Practice with simple models first, then layer in complexity.

As always, speed will come with reps, but clarity comes from slowing down and building clean, auditable logic. Take your time and practice over and over.