skills/merger-model-builder/references/deep/qa-checks

# QA Checks

Checks should be machine-computed where possible and surfaced in both `run_log.json` and `model.xlsx`.

## Hard failures

Hard failures make the model `not-decision-ready`.

- Sources and uses do not balance.
- Consideration mix does not sum to 100% unless explicitly overridden.
- Stock consideration is used but PF shares cannot be calculated.
- PF EPS cannot be calculated.
- Accretion/dilution sensitivity directionality fails.
- Purchase accounting bridge cannot reconcile.
- Required source categories are missing for material transaction terms.
- Tax rates are outside a defensible 0-100% range.
- Shares, debt, cash, fees, or fair values are impossible or negative where they must be non-negative.
- Required scenarios `base`, `downside`, or `upside` are missing.

## Warnings

Warnings lower confidence but may still allow `screen-grade` or `senior-review-ready` status.

- Placeholder, assumption, estimate, or unsupported evidence labels are used for material inputs.
- Synergies are unsupported or treated as immediate run-rate capture.
- Integration costs are zero or excluded from adjusted EPS without clear basis.
- One-time transaction costs are excluded from adjusted EPS; show GAAP and adjusted views separately.
- Tax, amortization, or DTL assumptions are missing or fully model-derived.
- Share price and share-count source dates conflict materially.
- Financing terms are placeholders or not tied to a commitment.
- Purchase accounting is preliminary or within measurement-period status.
- Revenue synergies drive most of the value.
- Deal is accretive only after synergies.
- Deal is accretive only on adjusted EPS, not GAAP EPS.
- Large intangible amortization add-back drives adjusted EPS.
- Target cash available for funding may be restricted or operationally required.

## Presentation And Readiness Checks

- The first visible tab separately labels `Calculation integrity` and `Decision readiness`; a later checks tab alone does not satisfy this requirement.
- An `adjusted_eps_screen` states that adjusted EPS is presented while GAAP accretion/dilution is not, and lists PPA, post-close denominator and refinancing gaps needed to upgrade the analysis.
- Do not call a model-derived synergy benefit `disclosed` or an implied cost-to-achieve amount `disclosed`. Distinguish disclosed gross run-rate synergies, disclosed pretax net synergies when provided, disclosed or clearly labeled implied cost-to-achieve, and modeled tax effects / after-tax contribution.
- An adjusted-EPS screen shows sensitivity for synergy realization and cost-to-achieve overrun or delayed capture, plus EPS breakeven against the selected pretax net synergy basis.
- Calculation-integrity checks reconcile modeled after-tax synergy benefit to pretax net synergy basis times one minus the modeled tax rate, reconcile the 100% synergy-realization sensitivity to the base synergy-case adjusted EPS output, and confirm EPS breakeven is the pretax net synergy required to eliminate no-synergy dilution.
- Do not rely on an "EPS with synergies is no worse than without synergies" comparison as the principal synergy calculation-integrity check; it is directionally expected and does not prove the bridge is correct.
- For fixed-ratio all-stock deals, share-price sensitivity is not required for ownership or EPS denominator mechanics unless the analysis includes purchase price, fair value, PPA, collar or variable-stock exposure.
- GAAP accretion/dilution appears only when PPA/amortization, integration-cost treatment, financing effects and denominator support are complete enough for the stated posture.
- Render and inspect the first visible tab, ownership, EPS bridge, synergies, sensitivities and checks/readiness sheets before delivery.

## Senior red flags

Surface these in the report when relevant:

- The model shows EPS accretion but the source of accretion is mainly leverage, tax, amortization add-backs, or share issuance math.
- Synergy breakeven is close to or above management's announced synergy case.
- Downside case becomes dilutive or loses meaningful ownership/control credibility.
- The purchase accounting bridge produces unusually high goodwill relative to consideration.
- Financing fees, lost interest, or target debt refinancing are omitted.
- Integration costs are excluded from all decision metrics.
- NOLs, tax basis step-up, contingent consideration, CVRs, or replacement awards are ignored despite deal relevance.
- Industry-specific metrics are missing: TBV earnback for banks, FFO/AFFO for REITs, ARR/churn/deferred revenue for SaaS, statutory capital for insurance, reserves/PV-10 for E&P, pipeline milestones for biotech.