Assess whether a top customer is actually sticky (4bbd04)

Situation

Customer-contract risk reviewer in a strategic buyer looking at a carve-out from a conglomerate has one working extract — customer concentration and termination-for-convenience clauses — after a TSA that expires before replacement systems exist. If customer concentration and termination-for-convenience clauses cannot support a top customer is actually sticky, the honest M&A Due Diligence output is hold.

Decision

Customer-contract risk reviewer in a strategic buyer looking at a carve-out from a conglomerate must choose Proceed / Reprice / Walk / Hold using customer concentration and termination-for-convenience clauses after a TSA that expires before replacement systems exist.

Hypotheses to test

• A TSA that expires before replacement systems exist is noise around an already-controlled Separation and Integration process in a strategic buyer looking at a carve-out from a conglomerate, given customer concentration and termination-for-convenience clauses.
• A TSA that expires before replacement systems exist is the event in customer concentration and termination-for-convenience clauses that forces Proceed for customer-contract risk reviewer under M&A Due Diligence.
• Customer concentration and termination-for-convenience clauses shows a one-file miss after a TSA that expires before replacement systems exist, not a Separation and Integration program failure.
• Customer concentration and termination-for-convenience clauses cannot decide a top customer is actually sticky yet after a TSA that expires before replacement systems exist; hold is the only M&A Due Diligence close a strategic buyer looking at a carve-out from a conglomerate can defend.

Analysis required

• Name the document customer-contract risk reviewer still needs before signing.
• Test whether a TSA that expires before replacement systems exist is a diligence gap, a price chip, or a walk-away.
• Separate a one-off add-back from a recurring earnings issue in customer concentration and termination-for-convenience clauses.
• For this M&A Due Diligence Separation and Integration file, read customer concentration and termination-for-convenience clauses against a TSA that expires before replacement systems exist and write the one fact that would move a top customer is actually sticky for customer-contract risk reviewer.

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