Whether earnings quality supports the bid price from carve-out stranded-cost

Situation

Integration-risk PMO in a PE platform evaluating a founder-led SaaS add-on has one working extract — carve-out stranded-cost model — after a TSA that expires before replacement systems exist. If carve-out stranded-cost model cannot support earnings quality supports the, the honest M&A Due Diligence output is hold.

Decision

Integration-risk PMO in a PE platform evaluating a founder-led SaaS add-on must choose Proceed / Reprice / Walk / Hold using carve-out stranded-cost model after a TSA that expires before replacement systems exist.

Hypotheses to test

• Carve-out stranded-cost model reads as Proceed once a TSA that expires before replacement systems exist is lined up to the same M&A Due Diligence population.
• Carve-out stranded-cost model is closer to Reprice after a TSA that expires before replacement systems exist; Proceed would over-claim this People and Contracts extract.
• Walk is still live in carve-out stranded-cost model for integration-risk PMO in a PE platform evaluating a founder-led SaaS add-on.
• Carve-out stranded-cost model is missing the fact integration-risk PMO needs after a TSA that expires before replacement systems exist; stop this M&A Due Diligence close.

Analysis required

• Tie quality-of-earnings, working-capital, and contingent items in carve-out stranded-cost model to earnings quality supports the.
• Name the document integration-risk PMO 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 People and Contracts file, read carve-out stranded-cost model against a TSA that expires before replacement systems exist and write the one fact that would move earnings quality supports the for integration-risk PMO.

Recommendation

Choose Proceed / Reprice / Walk / Hold on this M&A Due Diligence / People and Contracts packet (carve-out stranded-cost model after a TSA that expires before replacement systems exist). Lead with the M&A Due Diligence option carve-out stranded-cost model can support after a TSA that expires before replacement systems exist, then the two facts that force it, then the Monday action for integration-risk PMO in a PE platform evaluating a founder-led SaaS add-on.