Assess whether working capital should be a walk-away (ddd751)

SITUATION Commercial-diligence partner in a strategic buyer looking at a carve-out from a conglomerate has one working extract — working-capital peg versus seasonal reality — after a Phase II that found groundwater impact. If working-capital peg versus seasonal reality cannot support working capital should be, the only defensible M&A Due Diligence output is hold.

DECISION Commercial-diligence partner 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 Phase II that found groundwater impact.

HYPOTHESES TO TEST 1. A Phase II that found groundwater impact is noise around an already-controlled People and Contracts process in a strategic buyer looking at a carve-out from a conglomerate, given working-capital peg versus seasonal reality. 2. A Phase II that found groundwater impact is the event in working-capital peg versus seasonal reality that forces Proceed for commercial-diligence partner under M&A Due Diligence. 3. Working-capital peg versus seasonal reality shows a one-file miss after a Phase II that found groundwater impact, not a People and Contracts program failure. 4. Working-capital peg versus seasonal reality cannot decide working capital should be yet after a Phase II that found groundwater impact; 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. Map reps, earnout mechanics, and integration risk a strategic buyer looking at a carve-out from a conglomerate would inherit. 2. Tie quality-of-earnings, working-capital, and contingent items in working-capital peg versus seasonal reality to working capital should be. 3. Name the document commercial-diligence partner still needs before signing. 4. For this M&A Due Diligence People and Contracts file, read working-capital peg versus seasonal reality against a Phase II that found groundwater impact and write the one fact that would move working capital should be for commercial-diligence partner.

RECOMMENDATION Choose Proceed / Reprice / Walk / Hold on this M&A Due Diligence / People and Contracts packet (working-capital peg versus seasonal reality after a Phase II that found groundwater impact). Lead with the M&A Due Diligence option working-capital peg versus seasonal reality can support after a Phase II that found groundwater impact, then the two facts that force it, then the Monday action for commercial-diligence partner in a strategic buyer looking at a carve-out from a conglomerate.

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 commercial-diligence partner - Hypothesis scorecard against working-capital peg versus seasonal reality: supported / rejected / untestable - What changes working capital should be if a Phase II that found groundwater impact is later withdrawn - Named option among Proceed, Reprice, Walk and the fact that kills the others