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?
Schedule mock interviews on the Meeting Board, join the latest community discussions in our Consulting Q&A and find like-minded Interview Partners to connect and practice with!
Back to overview
Be the first to answer!
Nobody has responded to this question yet.
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.
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
Hey!
To improve accuracy in accretion/dilution models, start by building a clear, step-by-step framework that you follow every time: project pro forma EPS, adjust for deal synergies, incorporate financing costs, and confirm share count assumptions before calculating accretion or dilution.
Practice stress-testing your model by intentionally varying assumptions, such as purchase price, financing mix, or synergies, to see how sensitive your results are. Consistently reviewing each component in the same order helps reduce mistakes, and taking a few extra seconds to cross-check formulas and reconcile totals can prevent small errors from compounding under time pressure.
Hi!
A good approach is to develop a consistent, step-by-step framework for building accretion/dilution models, starting with a clean set of assumptions for the standalone companies, then layering in synergies, financing effects, and share count adjustments in a logical order. Practice building the model from scratch under timed conditions, and create a simple checklist of common pitfalls—like double-counting synergies, misapplying debt interest, or overlooking share dilution—so you can quickly verify each component. Stress-testing your work by comparing the outputs to simple sanity checks, such as EPS growth direction or rough multiples, helps catch errors early and builds confidence in executing the calculations accurately under pressure.
