Assess whether earnout definitions will cause a post-close fight (ee7f68)

Situation

Management-team retention and key-person map arrived with a TSA that expires before replacement systems exist for working-capital true-up analyst. That is a M&A Due Diligence Legal, IP, and Regulatory decision on earnout definitions will cause in a strategic buyer looking at a carve-out from a conglomerate.

Decision

Working-capital true-up analyst in a strategic buyer looking at a carve-out from a conglomerate must choose Proceed / Reprice / Walk / Hold using management-team retention and key-person map after a TSA that expires before replacement systems exist.

Hypotheses to test

• Management-team retention and key-person map reads as Proceed once a TSA that expires before replacement systems exist is lined up to the same M&A Due Diligence population.
• Management-team retention and key-person map is closer to Reprice after a TSA that expires before replacement systems exist; Proceed would over-claim this Legal, IP, and Regulatory extract.
• Walk is still live in management-team retention and key-person map for working-capital true-up analyst in a strategic buyer looking at a carve-out from a conglomerate.
• Management-team retention and key-person map is missing the fact working-capital true-up analyst needs after a TSA that expires before replacement systems exist; stop this M&A Due Diligence close.

Analysis required

• Name the document working-capital true-up analyst 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.
• Separate a one-off add-back from a recurring earnings issue in management-team retention and key-person map.
• For this M&A Due Diligence Legal, IP, and Regulatory file, read management-team retention and key-person map against a TSA that expires before replacement systems exist and write the one fact that would move earnout definitions will cause for working-capital true-up analyst.

Recommendation

Choose Proceed / Reprice / Walk / Hold on this M&A Due Diligence / Legal, IP, and Regulatory packet (management-team retention and key-person map after a TSA that expires before replacement systems exist). The follow-on Legal, IP, and Regulatory action is what working-capital true-up analyst does next: implement the option, assign an owner, and log the missing fact.