Assess whether related-party sales should be backed out of valuation (d958ad)

SITUATION After a CIM that omitted a material litigation, carve-out stranded-cost model is what carve-out separation lead can touch in a roll-up of three regional service companies. M&A Due Diligence will live with Proceed versus Reprice on this Earnings and Revenue Quality file.

DECISION Carve-out separation lead in a roll-up of three regional service companies must choose Proceed / Reprice / Walk / Hold using carve-out stranded-cost model after a CIM that omitted a material litigation.

HYPOTHESES TO TEST 1. Carve-out separation lead can defend Proceed from carve-out stranded-cost model after a CIM that omitted a material litigation in a M&A Due Diligence challenge. 2. Carve-out separation lead cannot defend Proceed from carve-out stranded-cost model; Reprice is what the extract actually supports after a CIM that omitted a material litigation. 3. A CIM that omitted a material litigation never reached the population in carve-out stranded-cost model — reopen intake, do not close related-party sales should be. 4. Two facts in carve-out stranded-cost model after a CIM that omitted a material litigation conflict for carve-out separation lead; hold this Earnings and Revenue Quality file.

ANALYSIS REQUIRED 1. Test whether a CIM that omitted a material litigation is a diligence gap, a price chip, or a walk-away. 2. Separate a one-off add-back from a recurring earnings issue in carve-out stranded-cost model. 3. Map reps, earnout mechanics, and integration risk a roll-up of three regional service companies would inherit. 4. For this M&A Due Diligence Earnings and Revenue Quality file, read carve-out stranded-cost model against a CIM that omitted a material litigation and write the one fact that would move related-party sales should be for carve-out separation lead.

RECOMMENDATION Choose Proceed / Reprice / Walk / Hold on this M&A Due Diligence / Earnings and Revenue Quality packet (carve-out stranded-cost model after a CIM that omitted a material litigation). The follow-on Earnings and Revenue Quality action is what carve-out separation lead 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 carve-out stranded-cost model, then the action for carve-out separation lead - Hypothesis scorecard against carve-out stranded-cost model: supported / rejected / untestable - Regulatory or exam hook Earnings and Revenue Quality would cite - Earnings and Revenue Quality finding in carve-out stranded-cost model that a second reviewer can re-perform