Make transaction assumptions: consideration (cash, debt, or equity),
transaction fees, synergies, etc.

1. Combine income statements of the acquirer and target
2. Adjust income statement and shares outstanding accordingly to
financing terms
• Add synergies
• Adjust for additional expenses (transaction fees)
• Add additional shares
• Subtract forgone interest on cash
• Subtract additional interest expense on debt
3. Calculate EPS by dividing combined net income by post-merger
shares outstanding of acquiring company
4. Compare combined EPS with acquirer’s current EPS to determine if
deal is accretive or dilutive