Build an M&A Model - Google Acquires Tesla

Overview There were periods when large tech players — including Google — explored deeper involvement with Tesla. While no deal ultimately happened, the strategic logic was compelling: combining Google’s software, data, and AI capabilities with Tesla’s hardware and energy ecosystem. For Google, acquiring Tesla would be a bold move beyond its core business — stepping into capital-intensive, operationally complex industries like automotive and manufacturing. The upside could be transformative, but the risks are equally significant. For Tesla, an acquisition could provide capital, infrastructure, and technological resources to scale faster — but at the cost of independence and long-term control. In this exercise, you step into the role of an investment banking analyst evaluating this potential transaction. Using public data and simplified assumptions, you will analyze whether this is a deal Google should pursue. Learning Goals Understand transaction mechanics: Complete the Sources & Uses section to see how the deal is financed and allocated. Project post-transaction financials: Forecast the impact of new debt, interest, and incremental D&A on the pro forma EPS and Income Statement for 1 year. Analyze accretion/dilution: Evaluate whether the transaction increases or decreases EPS (Dilution / Accretion), and perform sensitivity analysis to understand how deal assumptions affect the outcome. Key Concepts Accretion: Measures the positive effect of an acquisition on the acquirer’s EPS. Dilution: Measures the negative effect of an acquisition on the acquirer’s EPS. Sensitivity Analysis: Examines how changes in deal terms (e.g., stock % or offer price) impact accretion/dilution outcomes. Pro Forma EPS: The projected EPS after the transaction, including effects of new debt, D&A, and synergies. Sources of Funds: Tracks where the financing for the acquisition comes from (e.g., cash, debt, or stock issuance). Uses of Funds: Shows how the capital is applied, including purchase price, fees, and debt repayment. Asset Write-Up: Adjusting the target’s assets to fair market value, which affects depreciation and amortization in the pro forma model.

Practice Build an M&A Model - Google Acquires Tesla with interactive Excel modeling exercises in our M&A Modeling module.

This hands-on modeling exercise helps you master Build an M&A Model - Google Acquires Tesla through real-world Excel practice and financial modeling techniques.