Module V· Accretion / Dilution - MechanicsAdvanced
Question

How do you model A/D with different year-1 synergy phasing assumptions, and how sensitive is the result?

Answer

Build synergy phasing by year: for example 25% of run-rate in year 1, 75% in year 2, 100% in year 3. Apply tax effects and cost-to-achieve separately. A/D is highly sensitive to early synergy phasing because year-1 EPS includes full financing impact but often only partial synergies. Show sensitivity for 0%, 25%, 50%, and 100% year-1 realization.