Accretive

A transaction is accretive when pro forma EPS after the deal exceeds what the acquirer would have earned alone. The test is mechanical: the after tax earnings acquired exceed the after tax cost of paying for them.

The quick rule for an all stock deal is the P/E comparison. If the acquirer's P/E is higher than the target's, the deal is accretive before synergies, because it is buying earnings more cheaply than the market prices its own.

Accretion is not value creation. A high multiple acquirer buying a low multiple business is accretive by arithmetic alone even with no synergies and no improvement to either business, which is exactly what bootstrapping describes.

The right follow up is always what the accretion is made of: genuine synergies, cheap financing that carries risk, or multiple arbitrage that the market may unwind by re rating the combined group.