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One illusion often overlooked is that acquisitions inflate price-to-earnings multiples when the company being acquired is trading for less than the acquirer, which is almost always the case. It is thus possible to mask declining organic revenues through consistent acqusitions. As far as I know, Graham's analyses heavily depend on price multiples.

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What are you talking about? How does an acquisition "inflate price-to-earnings multiples"?

Also, it is possible to mask declining organic revenues through consistent acquisitions, but I don't think there's anything special about organic vs. acquired earnings growth. $1 of earnings is $1 of earnings, regardless of whether it was grown organically or acquired. You might believe that organic revenue growth is more persistent than acquired revenue growth, but that's an empirical question and is likely to be highly idiosyncratic.

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Sorry I might be wrong, but here's the logic. The acquirer is buying a cheaper revenue stream in PE terms than it generates on its own. Cheaper = acquisition requires less shares to be issued than if the companies had identical PEs. Less shares = higher resulting EPS = lower PE. One could thus use acquisitions to peg PE to a certain ceiling while organic earnings are declining. Yes/no?