Assess whether related-party sales should be backed out of valuation (df5498)

SITUATION Management-team retention and key-person map arrived with IT diligence showing two ERPs and no chart of accounts map for customer-contract risk reviewer. That is a M&A Due Diligence People and Contracts decision on related-party sales should be in a public acquirer facing HSR and sector regulators.

DECISION Customer-contract risk reviewer in a public acquirer facing HSR and sector regulators must choose Proceed / Reprice / Walk / Hold using management-team retention and key-person map after IT diligence showing two ERPs and no chart of accounts map.

HYPOTHESES TO TEST 1. Authorize Proceed now; management-team retention and key-person map already has the discriminator after IT diligence showing two ERPs and no chart of accounts map. 2. Keep Reprice in force until management-team retention and key-person map is completed after IT diligence showing two ERPs and no chart of accounts map for customer-contract risk reviewer. 3. Treat management-team retention and key-person map as Walk because both readings appear after IT diligence showing two ERPs and no chart of accounts map. 4. Refuse a M&A Due Diligence close: customer-contract risk reviewer does not have the decision related-party sales should be turns on in management-team retention and key-person map.

ANALYSIS REQUIRED 1. Separate a one-off add-back from a recurring earnings issue in management-team retention and key-person map. 2. Map reps, earnout mechanics, and integration risk a public acquirer facing HSR and sector regulators would inherit. 3. Tie quality-of-earnings, working-capital, and contingent items in management-team retention and key-person map to related-party sales should be. 4. For this M&A Due Diligence People and Contracts file, read management-team retention and key-person map against IT diligence showing two ERPs and no chart of accounts map and write the one fact that would move related-party sales should be for customer-contract risk reviewer.

RECOMMENDATION Choose Proceed / Reprice / Walk / Hold on this M&A Due Diligence / People and Contracts packet (management-team retention and key-person map after IT diligence showing two ERPs and no chart of accounts map). The follow-on People and Contracts action is what customer-contract risk reviewer does next: implement the option, assign an owner, and log the missing fact.

COMMAND RETURNS - Bottom-line M&A Due Diligence option on related-party sales should be, then the evidence in management-team retention and key-person map, then the action for customer-contract risk reviewer - Hypothesis scorecard against management-team retention and key-person map: supported / rejected / untestable - What changes related-party sales should be if IT diligence showing two ERPs and no chart of accounts map is later withdrawn - Named option among Proceed, Reprice, Walk and the fact that kills the others