ACCRETIVE

Summary

Accretive refers to any business action, particularly mergers and acquisitions, that increases a company's per-share financial metrics like earnings per share (EPS). When a company makes an accretive acquisition, it means the deal will boost the acquiring company's earnings per share, making each share more valuable to shareholders. This happens when the acquired company's earnings contribution exceeds the cost of financing the acquisition. The opposite is 'dilutive,' which decreases per-share metrics.

Usage Context

Critical when analyzing M&A transactions, evaluating corporate strategy decisions, and understanding how acquisitions impact shareholder value in corporate finance and investment analysis.

Common Confusions

• Thinking that accretive always means profitable or successful
• Confusing accretive with additive (just adding earnings without considering per-share impact)
• Believing that all acquisitions should be immediately accretive
• Mixing up which direction is good (accretive = positive, dilutive = negative)