Whether working capital should be a walk-away from QoE add-backs the seller

SITUATION Earnings and Revenue Quality work in a health-system acquiring a specialty practice now turns on working capital should be because an earnout based on 'adjusted EBITDA' with no dictionary put QoE add-backs the seller marked 'normalized' in play. Environmental diligence manager should say what QoE add-backs the seller marked 'normalized' proves.

DECISION Environmental diligence manager in a health-system acquiring a specialty practice must choose Proceed / Reprice / Walk / Hold using QoE add-backs the seller marked 'normalized' after an earnout based on 'adjusted EBITDA' with no dictionary.

HYPOTHESES TO TEST 1. An earnout based on 'adjusted EBITDA' with no dictionary is noise around an already-controlled Earnings and Revenue Quality process in a health-system acquiring a specialty practice, given QoE add-backs the seller marked 'normalized'. 2. An earnout based on 'adjusted EBITDA' with no dictionary is the event in QoE add-backs the seller marked 'normalized' that forces Proceed for environmental diligence manager under M&A Due Diligence. 3. QoE add-backs the seller marked 'normalized' shows a one-file miss after an earnout based on 'adjusted EBITDA' with no dictionary, not a Earnings and Revenue Quality program failure. 4. QoE add-backs the seller marked 'normalized' cannot decide working capital should be yet after an earnout based on 'adjusted EBITDA' with no dictionary; hold is the only M&A Due Diligence close a health-system acquiring a specialty practice can defend.

ANALYSIS REQUIRED 1. Map reps, earnout mechanics, and integration risk a health-system acquiring a specialty practice would inherit. 2. Tie quality-of-earnings, working-capital, and contingent items in QoE add-backs the seller marked 'normalized' to working capital should be. 3. Name the document environmental diligence manager still needs before signing. 4. For this M&A Due Diligence Earnings and Revenue Quality file, read QoE add-backs the seller marked 'normalized' against an earnout based on 'adjusted EBITDA' with no dictionary 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 (QoE add-backs the seller marked 'normalized' after an earnout based on 'adjusted EBITDA' with no dictionary). 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.

COMMAND RETURNS - Bottom-line M&A Due Diligence option on working capital should be, then the evidence in QoE add-backs the seller marked 'normalized', then the action for environmental diligence manager - Hypothesis scorecard against QoE add-backs the seller marked 'normalized': supported / rejected / untestable - Named option among Proceed, Reprice, Walk and the fact that kills the others - Owner and next date for environmental diligence manager in a health-system acquiring a specialty practice