Assess whether integration costs were sandbagged in the CIM from carve-out

SITUATION Carve-out stranded-cost model arrived with a QoE that cannot tie revenue to bank cash for carve-out separation lead. That is a M&A Due Diligence Earnings and Revenue Quality decision on integration costs were sandbagged in a roll-up of three regional service companies.

DECISION Carve-out separation lead in a roll-up of three regional service companies must choose Proceed / Reprice / Walk / Hold using carve-out stranded-cost model after a QoE that cannot tie revenue to bank cash.

HYPOTHESES TO TEST 1. The population in carve-out stranded-cost model is the one a QoE that cannot tie revenue to bank cash named, so Proceed follows for this Earnings and Revenue Quality file. 2. The population in carve-out stranded-cost model is adjacent only to a QoE that cannot tie revenue to bank cash; Reprice is the honest M&A Due Diligence call. 3. A roll-up of three regional service companies already contained a QoE that cannot tie revenue to bank cash before carve-out stranded-cost model arrived; no new Earnings and Revenue Quality path. 4. Provenance on carve-out stranded-cost model after a QoE that cannot tie revenue to bank cash is broken; do not pick Proceed or Reprice yet.

ANALYSIS REQUIRED 1. Separate a one-off add-back from a recurring earnings issue in carve-out stranded-cost model. 2. Map reps, earnout mechanics, and integration risk a roll-up of three regional service companies would inherit. 3. Tie quality-of-earnings, working-capital, and contingent items in carve-out stranded-cost model to integration costs were sandbagged. 4. For this M&A Due Diligence Earnings and Revenue Quality file, read carve-out stranded-cost model against a QoE that cannot tie revenue to bank cash and write the one fact that would move integration costs were sandbagged for carve-out separation lead.

RECOMMENDATION Choose Proceed / Reprice / Walk / Hold on this M&A Due Diligence / Earnings and Revenue Quality packet (carve-out stranded-cost model after a QoE that cannot tie revenue to bank cash). Lead with the M&A Due Diligence option carve-out stranded-cost model can support after a QoE that cannot tie revenue to bank cash, then the two facts that force it, then the Monday action for carve-out separation lead in a roll-up of three regional service companies.

COMMAND RETURNS - Bottom-line M&A Due Diligence option on integration costs were sandbagged, then the evidence in carve-out stranded-cost model, then the action for carve-out separation lead - Hypothesis scorecard against carve-out stranded-cost model: supported / rejected / untestable - Earnings and Revenue Quality finding in carve-out stranded-cost model that a second reviewer can re-perform - Missing page in carve-out stranded-cost model after a QoE that cannot tie revenue to bank cash, if any