Relative contribution analysis
M&A / Merger ModelA table setting each side's share of the combined company's metrics against the ownership share the proposed exchange ratio would give it.
Also written: contribution analysis
The metrics are usually revenue, EBITDA, EBIT, net income and cash flow, often with standalone equity value alongside them. In a combination struck at little or no premium it is the main evidence either board has that the ratio is fair, and it is the first document an opposing shareholder asks for.
The mistake that decides arguments is comparing an enterprise level metric with an equity level outcome. EBITDA is measured before interest, so it belongs to everybody who funded the business, lenders included. Ownership of the combined equity does not. A company contributing 45% of combined EBITDA while carrying most of the combined net debt should expect an equity share well below 45%, and the gap is arithmetic rather than unfairness.
The second discipline is basis. Two reporting frameworks, two year ends and two definitions of adjusted EBITDA have to be restated onto one basis and one calendar before any percentage means anything.
Read the table as a set of arguments rather than as an answer. Each row is a claim about which metric should drive the split, and most of the negotiation is about which rows carry weight, with the faster growing side pushing forward looking measures and the more cash generative side pushing current ones.
Worked example
Company B contributes 45% of combined EBITDA, 38% of combined net income and 40% of combined standalone equity value.
The proposed ratio gives it 40% of the combined equity. The EBITDA row looks unfair until you note that B carries most of the combined net debt, which is exactly why its net income and equity value shares are lower.
The net income row and the equity value row are the ones that speak to equity ownership. The EBITDA row speaks to enterprise value and needs net debt subtracted before it says anything about who should own what.