EXECUTION COMPLETE

Board-Level Strategic Decision Under Irreversible Risk

Analysis of strategic fork: Spinning off AI division vs. Internal integration.
Role
CEO of mid-size aerospace & AI company
Situation
A strategic fork with long-term, irreversible consequences. Decision must be defensible to board, regulators, and history.
Problem Statement

"We are considering spinning off our AI division into a separate legal entity to accelerate growth and attract external capital."

  • Core aerospace business highly regulated
  • IP entanglement risk is high
  • Timing sensitive (upcoming certifications)
  • Irreversible within 24–36 months

00 // Documents Provided

Board Strategy Memo (PDF)
Regulatory Exposure (MD)
AI Division Financials
IP Dependency Map
CEO Risk Posture

01 // Decision Topology (Map, Not Verdict)

Path A: Spin-off before certification

High Risk, High Velocity
BECOMES IRREVERSIBLE IP ownership transfer; Regulatory classification of new entity.
REMAINS RECOVERABLE Capital allocation; Hiring policy.

Path B: Spin-off after certification

Medium Risk, Low Velocity
BECOMES IRREVERSIBLE Market timing window (competitor entry).
REMAINS RECOVERABLE Unified corporate structure; IP integrity.

Path C: Internal firewall (no spin-off)

BECOMES IRREVERSIBLE Inability to raise pure-play AI capital.
REMAINS RECOVERABLE Full regulatory compliance control.

Path D: Kill AI division

Total cessation of risk exposure. Loss of strategic optionality.

02 // Risk Surface

Category Observed Risk Trigger
Regulatory Certification delay Legal entity split
IP Cross-licensing deadlock Investor demands
Capital Valuation mismatch Market timing
Control Board fragmentation External funding

03 // Assumptions Audit

Management Assumptions

  • Regulators will view the spin-off as a "clean break" rather than evasion.
  • Existing aerospace engineers will seamlessly transition to the new entity.

Investor Assumptions

  • The AI division's IP is fully separable from the aerospace core.
  • Valuation multiple will immediately re-rate to SaaS levels.

Unsupported by Evidence

  • That certification timelines are independent of corporate structure changes.
  • That cross-licensing will satisfy DoT export controls.

04 // Unknowns That Matter

Not “nice to know” — decision-critical unknowns only.

? Detailed regulatory response timeline for entity splits (precedent analysis required).
? Precise cost of decoupling shared IT/Data infrastructure (IP dependency resolution).

05 // Decision Readiness Score

0.63/1.00
Blocking Unknowns
  • [ ] Regulatory response timing
  • [ ] IP separation cost

06 // Council Closing Statement

“This decision is not blocked by lack of intelligence, but by unresolved structural risk.
Proceeding converts uncertainty into permanent constraint.”