Accretive

Accretive is a term used to describe a transaction or event that increases the value of a company. This can be done through a variety of means, such as increasing earnings, reducing debt, or issuing new shares.

In the context of mergers and acquisitions, an accretive transaction is one in which the acquiring company's earnings per share (EPS) increases as a result of the acquisition. This is typically the case when the acquired company is profitable and has a higher EPS than the acquiring company.

For example, if Company A acquires Company B, and Company B has a higher EPS than Company A, then the acquisition is said to be accretive. This is because the combined company will have a higher EPS than Company A did on its own.

Accretive transactions are often seen as being more desirable than dilutive transactions, which are those that decrease the acquiring company's EPS. This is because accretive transactions can help to increase the value of the acquiring company for its shareholders.

However, it is important to note that not all accretive transactions are necessarily good for the acquiring company. For example, an accretive transaction could be dilutive to the acquiring company's cash flow if the acquired company has a high debt load.

Ultimately, the decision of whether or not to pursue an accretive transaction is a complex one that should be made after careful consideration of all of the relevant factors.

In addition to mergers and acquisitions, the term accretive can also be used to describe other types of transactions or events. For example, a company's stock price could be said to be accretive if it increases after the company announces a new product or service.

Accretive is a relative term, and what is considered to be accretive for one company may not be accretive for another. Therefore, it is important to consider the specific circumstances of each situation before making a determination about whether or not a transaction or event is accretive.