Using the same companies (acquirer: $1,000 equity value, $100 net income; target: $2,000 equity value, $50 net income), how much in synergies is needed to make the all-stock deal accretive?

Question

IBPrep · Accepted Answer

5%.

Combining the two equity values gives a pro forma equity value of $3,000.

Using the same companies (acquirer: $1,000 equity value, $100 net income; target: $2,000 equity value, $50 net income), how much in synergies is needed to make the all-stock deal accretive?

Answer

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