Commercial-diligence partner must resolve whether management can run this

Situation

A strategic buyer looking at a carve-out from a conglomerate cannot treat a founder who will not sign a non-compete as color commentary on carve-out stranded-cost model. Commercial-diligence partner must close management can run this from that extract under M&A Due Diligence / People and Contracts.

Decision

Commercial-diligence partner in a strategic buyer looking at a carve-out from a conglomerate must choose Proceed / Reprice / Walk / Hold using carve-out stranded-cost model after a founder who will not sign a non-compete.

Hypotheses to test

• Commercial-diligence partner can defend Proceed from carve-out stranded-cost model after a founder who will not sign a non-compete in a M&A Due Diligence challenge.
• Commercial-diligence partner cannot defend Proceed from carve-out stranded-cost model; Reprice is what the extract actually supports after a founder who will not sign a non-compete.
• A founder who will not sign a non-compete never reached the population in carve-out stranded-cost model — reopen intake, do not close management can run this.
• Two facts in carve-out stranded-cost model after a founder who will not sign a non-compete conflict for commercial-diligence partner; hold this People and Contracts file.

Analysis required

• Separate a one-off add-back from a recurring earnings issue in carve-out stranded-cost model.
• Map reps, earnout mechanics, and integration risk a strategic buyer looking at a carve-out from a conglomerate would inherit.
• Tie quality-of-earnings, working-capital, and contingent items in carve-out stranded-cost model to management can run this.
• For this M&A Due Diligence People and Contracts file, read carve-out stranded-cost model against a founder who will not sign a non-compete and write the one fact that would move management can run this for commercial-diligence partner.

Recommendation

Choose Proceed / Reprice / Walk / Hold on this M&A Due Diligence / People and Contracts packet (carve-out stranded-cost model after a founder who will not sign a non-compete). Lead with the M&A Due Diligence option carve-out stranded-cost model can support after a founder who will not sign a non-compete, 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.