Assess whether related-party sales should be backed out of valuation (d04299)

SITUATION Regulatory-approval critical-path calendar arrived with IT diligence showing two ERPs and no chart of accounts map for customer-contract risk reviewer. That is a M&A Due Diligence Separation and Integration decision on related-party sales should be in a strategic buyer looking at a carve-out from a conglomerate.

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

HYPOTHESES TO TEST 1. The population in regulatory-approval critical-path calendar is the one IT diligence showing two ERPs and no chart of accounts map named, so Proceed follows for this Separation and Integration file. 2. The population in regulatory-approval critical-path calendar 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 regulatory-approval critical-path calendar arrived; no new Separation and Integration path. 4. Provenance on regulatory-approval critical-path calendar 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 regulatory-approval critical-path calendar. 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 Separation and Integration file, read regulatory-approval critical-path calendar 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 customer-contract risk reviewer.

RECOMMENDATION Choose Proceed / Reprice / Walk / Hold on this M&A Due Diligence / Separation and Integration packet (regulatory-approval critical-path calendar after IT diligence showing two ERPs and no chart of accounts map). The follow-on Separation and Integration action is what customer-contract risk reviewer 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 regulatory-approval critical-path calendar, then the action for customer-contract risk reviewer - Hypothesis scorecard against regulatory-approval critical-path calendar: supported / rejected / untestable - What changes related-party sales should be if IT diligence showing two ERPs and no chart of accounts map is later withdrawn - Named option among Proceed, Reprice, Walk and the fact that kills the others