Environmental diligence manager must resolve whether working capital should

Situation

Earnings and Revenue Quality work in a health-system acquiring a specialty practice now turns on working capital should be because a TSA that expires before replacement systems exist put carve-out stranded-cost model in play. Environmental diligence manager should say what carve-out stranded-cost model proves.

Decision

Environmental diligence manager in a health-system acquiring a specialty practice must choose Proceed / Reprice / Walk / Hold using carve-out stranded-cost model after a TSA that expires before replacement systems exist.

Hypotheses to test

• A TSA that expires before replacement systems exist is noise around an already-controlled Earnings and Revenue Quality process in a health-system acquiring a specialty practice, given carve-out stranded-cost model.
• A TSA that expires before replacement systems exist is the event in carve-out stranded-cost model that forces Proceed for environmental diligence manager under M&A Due Diligence.
• Carve-out stranded-cost model shows a one-file miss after a TSA that expires before replacement systems exist, not a Earnings and Revenue Quality program failure.
• Carve-out stranded-cost model cannot decide working capital should be yet after a TSA that expires before replacement systems exist; hold is the only M&A Due Diligence close a health-system acquiring a specialty practice can defend.

Analysis required

• Tie quality-of-earnings, working-capital, and contingent items in carve-out stranded-cost model to working capital should be.
• Name the document environmental diligence manager still needs before signing.
• Test whether a TSA that expires before replacement systems exist is a diligence gap, a price chip, or a walk-away.
• For this M&A Due Diligence Earnings and Revenue Quality file, read carve-out stranded-cost model against a TSA that expires before replacement systems exist and write the one fact that would move working capital should be for environmental diligence manager.

Recommendation

Choose Proceed / Reprice / Walk / Hold on this M&A Due Diligence / Earnings and Revenue Quality packet (carve-out stranded-cost model after a TSA that expires before replacement systems exist). The follow-on Earnings and Revenue Quality action is what environmental diligence manager does next: implement the option, assign an owner, and log the missing fact.