Why does bootstrapping increase current EPS and decrease future EPS? Thanks.
Bootstrapping doe not increase current EPS unless the P/E of the target is lower than the acquirer’s.
It’s basically accounting trickery. The acquiring company expects to keep the same P/E post merger, so if they buy a company with a lower P/E, they are in essence buying their earnings at a discount. However the market recognizes this, so the acquirers price will adjust to account for it.