Key Concepts
Accretion/DilutionWhether EPS increases (accretive) or decreases (dilutive) post-merger. Determines deal attractiveness to acquirer shareholders.
SynergiesCost savings or revenue enhancements from combining operations. Typically 1–3% of combined revenue.
GoodwillPurchase price minus fair value of net identifiable assets. Not amortized; tested annually for impairment.
Purchase Price Allocation (PPA)Process of assigning purchase price to acquired assets and liabilities at fair value.
Form S-4SEC filing for M&A transactions containing proxy statement and registration statement.
Tender OfferPublic offer to buy shares directly from shareholders at a specified price, usually at a premium.
Lock-Up AgreementContract preventing insiders from selling shares for a specified period post-IPO or M&A.
Breakup FeePenalty paid by target if deal falls through due to alternative offer. Typically 2–4% of deal value.