Assess whether related-party sales should be backed out of valuation after IT

SITUATION Carve-out stranded-cost model arrived with IT diligence showing two ERPs and no chart of accounts map for IP diligence counsel's financial counterpart. That is a M&A Due Diligence Earnings and Revenue Quality decision on related-party sales should be in a strategic buyer looking at a carve-out from a conglomerate.

DECISION IP diligence counsel's financial counterpart 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. The population in carve-out stranded-cost model is the one IT diligence showing two ERPs and no chart of accounts map named, so Proceed follows for this Earnings and Revenue Quality file. 2. The population in carve-out stranded-cost model is adjacent only to IT diligence showing two ERPs and no chart of accounts map; Reprice is the honest M&A Due Diligence call. 3. A strategic buyer looking at a carve-out from a conglomerate already contained IT diligence showing two ERPs and no chart of accounts map before carve-out stranded-cost model arrived; no new Earnings and Revenue Quality path. 4. Provenance on carve-out stranded-cost model after IT diligence showing two ERPs and no chart of accounts map is broken; do not pick Proceed or Reprice yet.

ANALYSIS REQUIRED 1. Test whether IT diligence showing two ERPs and no chart of accounts map 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 strategic buyer looking at a carve-out from a conglomerate would inherit. 4. For this M&A Due Diligence Earnings and Revenue Quality 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 related-party sales should be for IP diligence counsel's financial counterpart.

RECOMMENDATION Choose Proceed / Reprice / Walk / Hold on this M&A Due Diligence / Earnings and Revenue Quality packet (carve-out stranded-cost model after IT diligence showing two ERPs and no chart of accounts map). The follow-on Earnings and Revenue Quality action is what IP diligence counsel's financial counterpart 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 IP diligence counsel's financial counterpart - Hypothesis scorecard against carve-out stranded-cost model: supported / rejected / untestable - Named option among Proceed, Reprice, Walk and the fact that kills the others - Owner and next date for IP diligence counsel's financial counterpart in a strategic buyer looking at a carve-out from a conglomerate