Module V· Contribution Analysis & Shareholder DilutionIntermediate
Question
How do you calculate the combined ownership split in a stock-for-stock deal?
Answer
Calculate new shares issued to target shareholders using target shares times exchange ratio. Pro-forma shares equal acquirer existing shares plus new shares issued. Target ownership equals new shares issued divided by pro-forma shares. Acquirer ownership equals existing acquirer shares divided by pro-forma shares. Compare the split to contribution analysis to test fairness.