Message-ID: <5936951.1075842020260.JavaMail.evans@thyme> Date: Sun, 22 Apr 2001 18:25:55 -0700 (PDT) From: peggy.a.kostial@accenture.com To: andy.zipper@enron.com Subject: Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: peggy.a.kostial@accenture.com@ENRON X-To: Zipper, Andy X-cc: X-bcc: X-Folder: \ExMerge - Zipper, Andy\TSS X-Origin: ZIPPER-A X-FileName: andy zipper 6-26-02.PST Sorry for the delay......this has gotten kicked back several times now.......Hopefully, this one will go through. PK ..................................................................................................................................................................................................................................................................................................................... Andy and Dave - Attached below is the working deal sheet with Enron and Accenture's most recent iterations and comments. If you all could review our feedback and let us know your thoughts, that would be great. Also, Dave, please let me know if you want to move forward with the counsel discussion on Monday. Informally and respectfully, I would like to comment on Enron's sentiment that we have had six weeks to think about some of these things and as a result, the ambiguity should already be gone. I appreciate this point-of-view, but also want to share my perspective with you all: This is a nonstandard deal in terms of the traditional 'buyer seeks seller with needed asset'. This traditional approach likely has the buyer in the market for that asset already. All of the analysis to determine the value of that asset has most likely been completed. As a result, the buyer probably has a strong sense of the value of that asset to their business and is ready to pull the trigger if the price is right. Since Enron approached us with the service concept and the asset to be sold, this typical preexisting condition was not present. This is a big investment. It is not just the $5M, but an additional $15M in marketing, selling, designing, building, maintaining, and operating costs. Further, any delta between the $5M and the 30% TSH take due to Enron is additional investment for Accenture. So, we are really evaluating a $20+M investment, not a $5M investment. There is not good historical evidence that transaction based businesses, on a stand alone basis, are sustainable over any long term horizon (just look at the dot.bomb bust). Pricing determination for a transaction based business is difficult and highly volatile. Our market review has proven this yet again. I highlight these dynamics to explain, not excuse, our need to approach things the way that we have. That being said, I will reiterate that we would not even be performing this analysis (itself costly) if we did not have the highest regards for Enron, our collective ability to do well in the marketplace together, and a general bullishness for the value of this offering. I look forward to hearing from you all on Monday. Thanks, Peggy (See attached file: Enron - Accenture - Dealpoints v4.doc) ----- Forwarded by Peggy A. Kostial on 04/22/2001 11:37 AM ----- "Zipper, Andy" To: Peggy A. Kostial@Accenture, Kenny W. Baldwin@Accenture , "Bridges, Michael" enron.com> Subject: TSH proposal 04/19/2001 12:34 PM Kenny and Peggy, I have the following comments on the proposed deal sheet dated 4/17/01: -The keep whole commitment must be developed, but we are okay with the concept of contributing the revenue of any direct distribute deals minus our costs to the TSH. -We will provide Accenture with as much information as is commercially reasonable that describes the nature of the EnronOnline deal flow as it is occurring, for the purpose of aiding in marketing of the service. We cannot send the entire transaction stream containing non-subscribing entities for obvious privacy reasons. -The EnronOnline technology asset piece I have revised as follows: o EnronOnline technology asset is a part of the deal * EnronOnline retains Intellectual Property Rights (IPR) to 'Transaction Data Feed' software * Enron grants Accenture a fully paid-up, royalty-free, non-exclusive, perpetual, worldwide, non-assignable license to 'Smart Client' software. Accenture is free to develop the 'Smart Client' code and reuse it for any purpose related to the operation of an Energy Transaction Support Hub, but Enron retains IPR to all code provided by Enron within the context of this arrangement. * EnronOnline provides interface descriptions, design documentation and the actual code for the 'Smart Client' software. I think this gets us to where we all need to be. -The "Validate we are not off base..." dependency is irrelevant. Accenture has had six weeks to validate that. The 3 customer hurdle presumably does that. Our firm understanding of Accenture's position, stated by Kenny, is that if Accenture gets 3 customers to verbally commit, then we are done. We would strongly prefer that Accenture scrap the 3 customer litmus test, and move forward with the transaction based on the recognized value of the offering and the many other value factors for Accenture that have been previously discussed. Having said all this, we are friendly to the whole idea if it actually gets to the stage where it is a firm proposal. Regards, Andy Zipper (See attached file: Enron - Accenture - Dealpoints v4.doc) - Enron - Accenture - Dealpoints v4.doc