In an increasingly competitive landscape where shareholders value is high on the agenda, company management is constantly encouraged to evaluate their business strategies. Multinational corporations for instance tend to centralize their internal organization much more, with headquarter functions, cash pooling arrangements, shared service centers, group credit facilities, central IP or captive insurance companies, etc. In this context we also see companies divesting or swapping business segments which no longer contribute to their overall corporate strategy.
The revenue from a successful divestment can be invested in the further development of the remaining core assets, and management can concentrate more on the companies' core business.
Carving out integrated business units or "orphan" businesses can be a quite complex, particularly in a cross border setting. Engaging the right deal team of external legal or tax advisors and corporate service providers can make the difference between a successful transaction and a failed transaction (or even a transaction that never happens at all).
Each member of the deal team contributes a vital element to the completion of the transaction. A corporate service provider can assist for instance with the provision of local resident directors, registered address, opening of local bank accounts around the world etc. These administrative services are often required for newly formed entities immediately upon signing of the asset purchase agreement. This timing could be problematic in case the buyer of the assets does not (yet) have any boots on the ground in those countries. This particularly applies in case the buyer is a private equity firm. A corporate services provider can offer solutions to cover the absence of the buyer's own resources in the period between (and often beyond) signing and closing.
Here are three fundamental criteria for selecting the right corporate services provider for your carve out transaction:
1. Global reach
Ensure that your corporate service provider has offices and administrative people in those countries where you require services. In case the corporate service provider doesn't cover every country where you require services, you could ask if their network of preferred partners covers those missing countries. A good corporate service provider has established a professional procedure for selecting and managing their network of preferred partners. They perform due diligence on their partners to ensure premium quality, make an effort to streamline client acceptance, harmonize terms & conditions etc.
2. Central coordination
Ask your corporate service provider if they offer central coordination of your transaction through a single point of contact based in your own time zone. Such single point of contact can help you and your advisors to manage the heavy communication and information flows coming from the various local offices involved in the global carve out transaction. Central coordination also speeds up the transaction processes by bridging time zones, and avoiding communication related delays (think about language and cultural differences).
3. Expertise and experience
Check if your corporate service provider has enough experience with global carve out transactions, and if they would be able to provide relevant references. An experienced corporate service provider can be a valuable source of transaction management tools and other best practices. Furthermore they can highlight potential challenges and landmines that may otherwise be overlooked. Think for instance about a seemingly simple exercise of opening foreign bank accounts, which has proven to be increasingly difficult and can lead to unexpected delays.
What can Intertrust do for you?
Intertrust has vast experience in assisting with the implementation of complex cross-border carve-out projects, through a dedicated team of subject matter experts in North America, Europe, Asia and LATAM. This team has a significant track record in project management and central coordination of the various local teams involved. We closely collaborate with your corporate lawyers and tax advisors, to ensure a timely and accurate setup of carve out structure. Our approach has proven to be a true added value to any global transaction, and we look forward to the next opportunity to work with you too.
Don't take it from us
"Intertrust was instrumental in assisting us to close a complex global carve-out transaction on a very tight time frame. Having a hands-on, knowledgeable project manager at Intertrust liaising with many international jurisdictions was critical in our ability to meet acquisition milestones and greatly reduced our internal project management efforts. Intertrust demonstrated knowledge and experience and was effective throughout. Should we have another opportunity to bring Intertrust's resources to bear, we will certainly call on them right away." A West Coast PE firm with over USD 3 billion AUM, buyer in a global carve-out transaction
Interested in what we can do for you? Please contact one of our experts.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.