Assess whether the carve-out is operable on day one (fcb513)

SITUATION In a strategic buyer looking at a carve-out from a conglomerate, carve-out stranded-cost model is the evidence after IT diligence showing two ERPs and no chart of accounts map. Customer-contract risk reviewer has to pick Proceed or Reprice for this M&A Due Diligence Separation and Integration close using carve-out stranded-cost model.

DECISION Customer-contract risk reviewer in a strategic buyer looking at a carve-out from a conglomerate must choose Proceed / Reprice / Walk / Hold using carve-out stranded-cost model after IT diligence showing two ERPs and no chart of accounts map.

HYPOTHESES TO TEST 1. Carve-out stranded-cost model reads as Proceed once IT diligence showing two ERPs and no chart of accounts map is lined up to the same M&A Due Diligence population. 2. Carve-out stranded-cost model is closer to Reprice after IT diligence showing two ERPs and no chart of accounts map; Proceed would over-claim this Separation and Integration extract. 3. Walk is still live in carve-out stranded-cost model for customer-contract risk reviewer in a strategic buyer looking at a carve-out from a conglomerate. 4. Carve-out stranded-cost model is missing the fact customer-contract risk reviewer needs after IT diligence showing two ERPs and no chart of accounts map; stop this M&A Due Diligence close.

ANALYSIS REQUIRED 1. Separate a one-off add-back from a recurring earnings issue in carve-out stranded-cost model. 2. Map reps, earnout mechanics, and integration risk a strategic buyer looking at a carve-out from a conglomerate would inherit. 3. Tie quality-of-earnings, working-capital, and contingent items in carve-out stranded-cost model to the carve-out is operable. 4. For this M&A Due Diligence Separation and Integration file, read carve-out stranded-cost model against IT diligence showing two ERPs and no chart of accounts map and write the one fact that would move the carve-out is operable for customer-contract risk reviewer.

RECOMMENDATION Choose Proceed / Reprice / Walk / Hold on this M&A Due Diligence / Separation and Integration packet (carve-out stranded-cost model after IT diligence showing two ERPs and no chart of accounts map). If carve-out stranded-cost model cannot force a M&A Due Diligence label under Separation and Integration, stop. If carve-out stranded-cost model after IT diligence showing two ERPs and no chart of accounts map cannot support Proceed versus Reprice on this M&A Due Diligence Separation and Integration close, customer-contract risk reviewer must do not proceed, reprice, or walk on a quality-of-earnings fact the packet does not carry.

COMMAND RETURNS - Bottom-line M&A Due Diligence option on the carve-out is operable, then the evidence in carve-out stranded-cost model, then the action for customer-contract risk reviewer - Hypothesis scorecard against carve-out stranded-cost model: supported / rejected / untestable - Owner and next date for customer-contract risk reviewer in a strategic buyer looking at a carve-out from a conglomerate - What changes the carve-out is operable if IT diligence showing two ERPs and no chart of accounts map is later withdrawn