Assess whether working capital should be a walk-away (bfb899)

SITUATION Separation and Integration work in a strategic buyer looking at a carve-out from a conglomerate now turns on working capital should be because add-backs that are just delayed opex put carve-out stranded-cost model in play. Separation and Integration work in a strategic buyer looking at a carve-out from a conglomerate now turns on working capital should be because add-backs that are just delayed opex put carve-out stranded-cost model in play; customer-contract risk reviewer should say what carve-out stranded-cost model proves for M&A Due Diligence.

DECISION Customer-contract risk reviewer 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 add-backs that are just delayed opex.

HYPOTHESES TO TEST 1. Customer-contract risk reviewer can defend Proceed from carve-out stranded-cost model after add-backs that are just delayed opex in a M&A Due Diligence challenge. 2. Customer-contract risk reviewer cannot defend Proceed from carve-out stranded-cost model; Reprice is what the extract actually supports after add-backs that are just delayed opex. 3. Add-backs that are just delayed opex never reached the population in carve-out stranded-cost model — reopen intake, do not close working capital should be. 4. Two facts in carve-out stranded-cost model after add-backs that are just delayed opex conflict for customer-contract risk reviewer; hold this Separation and Integration file.

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 strategic buyer looking at a carve-out from a conglomerate would inherit. 3. Tie quality-of-earnings, working-capital, and contingent items in carve-out stranded-cost model to working capital should be. 4. For this M&A Due Diligence Separation and Integration file, read carve-out stranded-cost model against add-backs that are just delayed opex and write the one fact that would move working capital should be for customer-contract risk reviewer.

RECOMMENDATION Choose Proceed / Reprice / Walk / Hold on this M&A Due Diligence / Separation and Integration packet (carve-out stranded-cost model after add-backs that are just delayed opex). Lead with the M&A Due Diligence option carve-out stranded-cost model can support after add-backs that are just delayed opex, then the two facts that force it, then the Monday action for customer-contract risk reviewer in a strategic buyer looking at a carve-out from a conglomerate.

COMMAND RETURNS - Bottom-line M&A Due Diligence option on working capital should be, then the evidence in carve-out stranded-cost model, then the action for customer-contract risk reviewer - Hypothesis scorecard against carve-out stranded-cost model: supported / rejected / untestable - Regulatory or exam hook Separation and Integration would cite - Separation and Integration finding in carve-out stranded-cost model that a second reviewer can re-perform