WIREFRAME · non-functional design mockup · Corporate Development — Synergy & Standalone Verification · static illustrative data (Project Helios)
Project Helios · Enterprise data-analytics software · LOI / exclusivity 2026-05-18

Acquisition Case — Synergy & Standalone Model

Reviewed by DiligenceWorks · in-house adversarial diligence (augments advisors, not a replacement)
57cred.
Claim-credibility score. $513M of the offer unsupported.
$1.30B
Offer EV · 12.0× $85M EBITDA + $280M synergy
Seven adversarial checks
Band A · standalone integrityBand B · synergy premium
Revenue Recognition Reject
6 reseller / hardware-as-software / channel-stuffed deals booked on sell-in; target's own ASC 606 needs an end-user.
−$19M EBITDA× 12.0 = −$228M price
Earnings Quality Flag
3rd-consecutive-year "restructuring" + capitalized R&D booked as add-backs — recurring, not one-time.
−$7M EBITDA× 12.0 = −$84M price
Working Capital Flag
Proposed NWC peg $95M vs normalized TTM-avg $130M; buyer re-funds the gap at close.
−$35M pricedollar-for-dollar
Concentration & Forecast Reject
Top-3 = 41% (two month-to-month, one related party); forecast 22% vs 6% trailing — hockey stick.
$30M EBITDA at risk→ escrow / earnout / RWI
Cost-Synergy Flag
$10M of $28M claimed cost synergy already in target run-rate; gross-not-net ($4M stranded cost ignored).
−$66M synergyvalue removed from premium
Revenue-Synergy Reject
Cross-sell attach-rate 3× peer base rate, instant ramp, no base-rate support; 75% haircut.
−$60M synergyvalue removed from premium
Cost-to-Achieve Flag
One-time integration cost presented $20M; bottoms-up $60M (severance, ERP, retention, rebranding).
−$40M costdollar-for-dollar
Cards reveal in sequence during the demo. Green = pass · Amber = flag (negotiate) · Red = reject (structure / condition). Four checks test the target's standalone integrity (revenue recognition, earnings quality, working capital, concentration & forecast); three test the synergy premium (cost-synergy, revenue-synergy, cost-to-achieve). Standalone-EBITDA findings are multiplied by the 12.0× deal multiple; working-capital and cost-to-achieve are dollar-for-dollar; risk findings carry an at-risk figure. Each amount is traceable (see audit drawer).
Exception report
ItemCheckFindingClaimedSupportedDeltaSource
1Revenue Recognition6 reseller / hardware-as-software / channel-stuffed transactions recognized on quarter-end sell-in; under the target's own ASC 606 sell-through policy these require an identified end-user — reverses on restatement$19.0M$0$19.0MVAR agreements · GL
2Earnings Quality3rd-consecutive-year "non-recurring" restructuring + capitalized R&D treated as add-backs — both recurring$7.0M$0$7.0MGL · add-back schedule
3Working CapitalProposed target-NWC peg $95M vs normalized trailing-12-mo average $130M — buyer re-funds the gap at close$95.0M$130.0M$35.0M†12-mo balance sheets
4Concentration & ForecastTop-3 customers 41% (two month-to-month, one related party); standalone forecast 22% growth vs 6% trailing — hockey stick, no base rate——$30.0M*sales ledger · forecast history
5Cost-Synergy$10M of $28M claimed cost-synergy run-rate already inside the target's numbers; presented gross, not net of $4M stranded cost——$66.0M§synergy schedule · run-rate
6Revenue-Synergy$12M cross-sell run-rate assumes 3× peer attach-rate, instant ramp, no historical base rate — 75% haircut——$60.0M§peer attach-rate benchmark
7Cost-to-AchieveOne-time integration cost presented at $20M; bottoms-up $60M (severance, ERP/systems migration, retention pool, rebranding, TSA)$20.0M$60.0M$40.0M†integration workbook
Standalone EBITDA overstatement $26M → at 12.0× = $312M of price · + $35M working-capital · + $166M synergy value removed · − $40M of which is cost-to-achieve$513M*$30M EBITDA / $140M rev. at risk → structure · †dollar-for-dollar · §synergy value removed
Accretion (internal recompute, not a headline card): the pro-forma model is re-derived on the restated EBITDA and haircut synergies — the seller-presented "9% year-1 EPS accretion" turns dilutive. Table-stakes, not a card.
Recommended position
Deal multiple 12.0× — illustrative; adjust to re-run the value bridge (stub)
Value bridge: Offer $1.30B  →  Defensible $787M  →  $513M premium-at-risk
Defensible = $708M restated standalone EV + $114M net synergy − $35M working-capital.
$787M
Support
$438M
Renegotiate
$75M
Restructure
Export IC / board memo (PDF) Send to VDR / IC (stub) Accept / override flags
Audit drawer (on click): Source = VAR reseller agreement HE-2231 + GL revenue line — reseller "Meridian Channel Partners" has no identified end-user; $4.2M recognized on quarter-end sell-in, reversed under the target's own ASC 606 sell-through policy. One of 6 such transactions ($19M total); at 12.0× that is $228M of the premium. Concentration & revenue-recognition risk → escrow / earnout / holdback / RWI, not a price line.

Programmatic-M&A pipeline — this acquirer

$1.6B
of premium flagged across 9 targets screened this M&A cycle — the deals you didn't overpay for, or killed in week one not after the writedown
Bars = $ premium flagged per target · amber = above the walk-away threshold.
Mockup only — illustrative figures, no live engine. Final figures come from the seven-check engine per DESIGN-corporate-development-synergy-case-verification.md.