What are the complete effects of an acquisition?

1. Foregone Interest on Cash – The buyer loses the Interest it would have otherwise earned if it uses cash for the acquisition

2. Additional Interest on Debt – The buyer pays additional Interest Expense if it uses debt.

3. Additional Shares Outstanding – If the buyer pays with stock, it must issue additional shares.

4. Combined Financial Statements – After the acquisition, the seller’s financials are added to the buyer’s.

5. Creation of Goodwill & Other Intangibles – These Balance Sheet items that represent a “premium” paid to a company’s “fair value” also get created.

Note: There’s actually more than this (see the advanced questions), but this is usually sufficient to mention in interviews.