Assess whether integration costs were sandbagged in the CIM (047d78)

Situation

In a strategic buyer looking at a carve-out from a conglomerate, carve-out stranded-cost model is the evidence after a contractor who actually wrote the core code. Working-capital true-up analyst has to pick Proceed or Reprice for this M&A Due Diligence Legal, IP, and Regulatory close using carve-out stranded-cost model.

Decision

Working-capital true-up analyst 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 a contractor who actually wrote the core code.

Hypotheses to test

• The population in carve-out stranded-cost model is the one a contractor who actually wrote the core code named, so Proceed follows for this Legal, IP, and Regulatory file.
• The population in carve-out stranded-cost model is adjacent only to a contractor who actually wrote the core code; Reprice is the honest M&A Due Diligence call.
• A strategic buyer looking at a carve-out from a conglomerate already contained a contractor who actually wrote the core code before carve-out stranded-cost model arrived; no new Legal, IP, and Regulatory path.
• Provenance on carve-out stranded-cost model after a contractor who actually wrote the core code is broken; do not pick Proceed or Reprice yet.

Analysis required

• Separate a one-off add-back from a recurring earnings issue in carve-out stranded-cost model.
• Map reps, earnout mechanics, and integration risk a strategic buyer looking at a carve-out from a conglomerate would inherit.
• Tie quality-of-earnings, working-capital, and contingent items in carve-out stranded-cost model to integration costs were sandbagged.
• For this M&A Due Diligence Legal, IP, and Regulatory file, read carve-out stranded-cost model against a contractor who actually wrote the core code and write the one fact that would move integration costs were sandbagged for working-capital true-up analyst.

Recommendation

Choose Proceed / Reprice / Walk / Hold on this M&A Due Diligence / Legal, IP, and Regulatory packet (carve-out stranded-cost model after a contractor who actually wrote the core code). Lead with the M&A Due Diligence option carve-out stranded-cost model can support after a contractor who actually wrote the core code, then the two facts that force it, then the Monday action for working-capital true-up analyst in a strategic buyer looking at a carve-out from a conglomerate.