Assess whether working capital should be a walk-away (772759)

SITUATION A strategic buyer looking at a carve-out from a conglomerate has working-capital peg versus seasonal reality in hand following a customer who just sent a non-renewal. Customer-contract risk reviewer must determine whether working capital should be a walk-away for this M&A Due Diligence Separation and Integration file.

DECISION Customer-contract risk reviewer in a strategic buyer looking at a carve-out from a conglomerate must choose Proceed / Reprice / Walk / Hold using working-capital peg versus seasonal reality after a customer who just sent a non-renewal.

HYPOTHESES TO TEST 1. A customer who just sent a non-renewal is noise around an already-controlled Separation and Integration process in a strategic buyer looking at a carve-out from a conglomerate, given working-capital peg versus seasonal reality. 2. A customer who just sent a non-renewal is the event in working-capital peg versus seasonal reality that forces Proceed for customer-contract risk reviewer under M&A Due Diligence. 3. Working-capital peg versus seasonal reality shows a one-file miss after a customer who just sent a non-renewal, not a Separation and Integration program failure. 4. Working-capital peg versus seasonal reality cannot decide working capital should be yet after a customer who just sent a non-renewal; hold is the only M&A Due Diligence close a strategic buyer looking at a carve-out from a conglomerate can defend.

ANALYSIS REQUIRED 1. Tie quality-of-earnings, working-capital, and contingent items in working-capital peg versus seasonal reality to working capital should be. 2. Name the document customer-contract risk reviewer still needs before signing. 3. Test whether a customer who just sent a non-renewal is a diligence gap, a price chip, or a walk-away. 4. For this M&A Due Diligence Separation and Integration file, read working-capital peg versus seasonal reality against a customer who just sent a non-renewal and write the one fact that would move working capital should be for customer-contract risk reviewer.

RECOMMENDATION Choose Proceed / Reprice / Walk / Hold on this M&A Due Diligence / Separation and Integration packet (working-capital peg versus seasonal reality after a customer who just sent a non-renewal). 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 working capital should be, then the evidence in working-capital peg versus seasonal reality, then the action for customer-contract risk reviewer - Hypothesis scorecard against working-capital peg versus seasonal reality: supported / rejected / untestable - Owner and next date for customer-contract risk reviewer in a strategic buyer looking at a carve-out from a conglomerate - What changes working capital should be if a customer who just sent a non-renewal is later withdrawn