Assess whether integration costs were sandbagged in the CIM (a11957)

Situation

Carve-out stranded-cost model arrived with IT diligence showing two ERPs and no chart of accounts map for commercial-diligence partner. That is a M&A Due Diligence Legal, IP, and Regulatory decision on integration costs were sandbagged in a cross-border deal with earnout-heavy structure.

Decision

Commercial-diligence partner in a cross-border deal with earnout-heavy structure 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

• IT diligence showing two ERPs and no chart of accounts map is noise around an already-controlled Legal, IP, and Regulatory process in a cross-border deal with earnout-heavy structure, given carve-out stranded-cost model.
• IT diligence showing two ERPs and no chart of accounts map is the event in carve-out stranded-cost model that forces Proceed for commercial-diligence partner under M&A Due Diligence.
• Carve-out stranded-cost model shows a one-file miss after IT diligence showing two ERPs and no chart of accounts map, not a Legal, IP, and Regulatory program failure.
• Carve-out stranded-cost model cannot decide integration costs were sandbagged yet after IT diligence showing two ERPs and no chart of accounts map; hold is the only M&A Due Diligence close a cross-border deal with earnout-heavy structure can defend.

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 cross-border deal with earnout-heavy structure 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 IT diligence showing two ERPs and no chart of accounts map and write the one fact that would move integration costs were sandbagged for commercial-diligence partner.

Recommendation

Choose Proceed / Reprice / Walk / Hold on this M&A Due Diligence / Legal, IP, and Regulatory packet (carve-out stranded-cost model after IT diligence showing two ERPs and no chart of accounts map). Lead with the M&A Due Diligence option carve-out stranded-cost model can support after IT diligence showing two ERPs and no chart of accounts map, then the two facts that force it, then the Monday action for commercial-diligence partner in a cross-border deal with earnout-heavy structure.