Moelis Accretion/Dilution Interview Question 2027: How to Nail It
Accretion/dilution is one of Moelis's most-asked technical questions — and most failed. The question sounds simple: "Is this deal accretive or dilutive?" But interviewers follow up with "why?" and "what if the target has a higher P/E?" until candidates who memorized a definition collapse. Here is how to nail the Moelis accretion dilution question.
The Moelis Accretion Dilution Question: What It Really Tests
The Moelis accretion/dilution question tests whether you understand the mechanics of a stock deal, not whether you memorized a rule. The core logic: a deal is accretive if the acquirer's earnings yield (1 / P/E) is higher than the target's earnings yield — equivalently, if the acquirer's P/E is higher than the target's P/E, assuming an all-stock deal with no synergies. Interviewers then layer on complications: synergies, cash vs. stock mix, and purchase accounting effects.
How to Nail the Moelis Accretion Dilution Question
Use this structure every time:
- State the rule. "All-stock deal, no synergies: accretive if acquirer's P/E exceeds target's P/E."
- Show the intuition. "You're paying with 'expensive' currency for 'cheap' earnings — the combined EPS goes up."
- Handle the follow-ups. Synergies make any deal more accretive. Cash deals depend on the after-tax cost of debt vs. the target's earnings yield. Then mention the real-world caveats: EPS accretion does not equal value creation.
Practice saying this in under 90 seconds without notes.
Preparing Accretion/Dilution for Moelis
- Drill real Moelis questions. Our 2027 Moelis Investment Banking Online Assessment Tutorials includes the exact Moelis accretion/dilution question variants candidates faced, with model answers and the follow-up chains interviewers use.
- Do the math by hand. Be able to compute combined EPS from two companies' earnings and share counts on paper.
- Prepare the edge cases. Higher P/E target, 50/50 cash-stock mix, negative earnings — know each one.
Getting accretion/dilution wrong at Moelis is an instant credibility loss, because it is considered basic analyst knowledge. It is also one of the easiest questions to lock down with a few hours of real practice. Do not be the candidate who fumbles the question every analyst is expected to know.
FAQs
What is the quick rule for accretion/dilution? In an all-stock deal with no synergies: accretive if the acquirer's P/E is higher than the target's P/E; dilutive if lower.
Do synergies affect accretion/dilution? Yes — synergies increase combined earnings, making any deal more accretive (or less dilutive).
Does Moelis ask accretion/dilution in every interview? Not every round, but it appears frequently enough that you should treat it as guaranteed across a full interview process.
What is the trickiest follow-up? "What if the target has negative earnings?" — the P/E rule breaks down, so walk through the EPS math directly instead of relying on the shortcut.
Preparing for Moelis & Company's technical interview? Our 2027 Moelis Investment Banking Online Assessment Tutorials has the exact questions and answers — $79 one-time, instant download.
