It is a financial and accounting term describing the gradual, incremental increase in an asset’s value, earnings, or ownership over time, commonly applied in bond investing, mergers and acquisitions (M&A), and corporate growth._
In bond investing, it occurs when a bond is bought below its par (face) value, and its value gradually rises to the face value by maturity.
Accretion is a financial and accounting term describing the gradual, incremental increase in an asset’s value, earnings, or ownership over time, commonly applied in bond investing, mergers and acquisitions (M&A), and corporate growth.
It occurs when a bond is bought below its par (face) value, and its value gradually rises to the face value by maturity.
The difference (discount) divided by the bond’s term determines the accretion rate.
Contrasts with amortization, which applies to bonds bought at a premium.
It indicates that the acquirer's earnings per share rise after the deal closes.
A deal is "accretive" if the combined company’s EPS exceeds the acquirer’s standalone EPS.
Typically occurs when the acquired company has a higher price-to-earnings ratio.
In venture capital/private equity, accretion can refer to an increased ownership percentage without additional investment, often due to non-participation in funding rounds.
Broadly applies to the appreciation of securities or assets, driving financial growth.