what is accretive 
in both finance and in general lexicon the term accretive is the adjective form of the word accretion which refers to gradual or incremental growth for example an acquisition deal may be deemed accretive for the absorbing company if that deal contributes to an increase in earnings per share by definition in corporate finance accretive acquisitions of assets or businesses must ultimately add more value to a company than the expenditures associated with the acquisition this can be due to the fact that the newly acquired assets in question are purchased at a discount to their perceived current market value or if the assets are expected to grow as a direct result of the transaction key takeaways the term accretive is an adjective that refers to business deals that result in gradual or incremental growth in value for a company in corporate finance accretive acquisitions of assets must add more value to a company than the costs of acquiring the target entity accretive deals can occur if acquired assets are purchased at a discount to their perceived current market value in general finance accretive investments refer to any security that is purchased at a discount breaking down accretivein general finance accretion refers to the change in the price of a bond or security in fixed income investments the word accretive may be used to describe the increase in value attributable to interest accrued but not paid for example discounted bonds earn interest through accretion until they reach maturity in such cases acquired bonds are acquired at a discount when compared to the current face value of the bond also known as the par as the bond matures the value increases based on the interest rate that was in effect at the time of issuance determining the rate of accretionthe rate of accretion is determined by dividing the discount by the number of years in the term in the case of zero coupon bonds the interest acquired is not compounded while the value of the bond increases based on the agreed upon interest rate it must be held for the agreed upon term before it can be cashed out examples of accretionif a person purchases a bond with a value of 1 000 for the discounted price of 750 with the understanding that it will be held for 10 years the deal is considered accretive because the bond pays out the initial investment plus interest depending on the type of bond purchased interest may be paid out at regular intervals annually semi annually etc or it may be paid in lump sum upon maturity with zero coupon bonds there is no interest accrual instead it is purchased at a discount such as the initial 750 investment for a bond with a face value of 1 000 the bond pays the original face value also known as the accreted value of 1 000 in a lump sum upon maturity in corporate finance acquisition deals are often accretive first let s assume that the earnings per share of corporation x is listed as 100 and earnings per share of corporation y is listed as 50 when corporation x acquires corporation y corporations x s earnings per share increase to 150 rendering this a 50 accretive deal important the antonym to accretive is dilutive which describes any deal which causes a corporation s earnings per share value to drop 