Assess whether related-party sales should be backed out of valuation (03a527)

SITUATION Carve-out stranded-cost model arrived with a TSA that expires before replacement systems exist for commercial-diligence partner. That is a M&A Due Diligence Separation and Integration decision on related-party sales should be in a public acquirer facing HSR and sector regulators.

DECISION Commercial-diligence partner in a public acquirer facing HSR and sector regulators must choose Proceed / Reprice / Walk / Hold using carve-out stranded-cost model after a TSA that expires before replacement systems exist.

HYPOTHESES TO TEST 1. A TSA that expires before replacement systems exist is noise around an already-controlled Separation and Integration process in a public acquirer facing HSR and sector regulators, given carve-out stranded-cost model. 2. A TSA that expires before replacement systems exist is the event in carve-out stranded-cost model that forces Proceed for commercial-diligence partner under M&A Due Diligence. 3. Carve-out stranded-cost model shows a one-file miss after a TSA that expires before replacement systems exist, not a Separation and Integration program failure. 4. Carve-out stranded-cost model cannot decide related-party sales should be yet after a TSA that expires before replacement systems exist; hold is the only M&A Due Diligence close a public acquirer facing HSR and sector regulators can defend.

ANALYSIS REQUIRED 1. Test whether a TSA that expires before replacement systems exist is a diligence gap, a price chip, or a walk-away. 2. Separate a one-off add-back from a recurring earnings issue in carve-out stranded-cost model. 3. Map reps, earnout mechanics, and integration risk a public acquirer facing HSR and sector regulators would inherit. 4. For this M&A Due Diligence Separation and Integration file, read carve-out stranded-cost model against a TSA that expires before replacement systems exist and write the one fact that would move related-party sales should be for commercial-diligence partner.

RECOMMENDATION Carve-out stranded-cost model after a TSA that expires before replacement systems exist is the only extract commercial-diligence partner can defend for related-party sales should be in a public acquirer facing HSR and sector regulators. Choose the option carve-out stranded-cost model actually carries, then the next Separation and Integration action for commercial-diligence partner. The hypothesis still open on carve-out stranded-cost model is: A TSA that expires before replacement systems exist is noise around an already-controlled Separation and Integration process in a public acquirer facing HSR and

COMMAND RETURNS - Bottom-line M&A Due Diligence option on related-party sales should be, then the evidence in carve-out stranded-cost model, then the action for commercial-diligence partner - Hypothesis scorecard against carve-out stranded-cost model: supported / rejected / untestable - Named option among Proceed, Reprice, Walk and the fact that kills the others - Owner and next date for commercial-diligence partner in a public acquirer facing HSR and sector regulators