During a carve-out, the Transition Services Agreement (TSA)is like a temporary lease on your old apartment—you're technically moving out, but you still need Wi-Fi and electricity until you find a new place. If not properly structured, a TSA can lead to chaos, confusion, and possibly a few gray hairs.
Here are four key considerations to avoid turning your carve-out into a corporate horror story:
1. Leave No Room for Surprises: Detail Scope, Duration, Roles, and Responsibilities
A TSA should explicitly outline what services the parent company will provide—think IT support, HR, finance, other shared services, and, most importantly, focused project management for this effort. Without a clearly defined timeline (usually 6 - 18 months), your business could seem like an unwanted ex-partner that the parent company can't get rid of. Keep the timeline tight, keep it clear, and don't let it drag on indefinitely.
2. Mind the "Friends and Family" Discounts by Pricing Fair and Transparent Services
Nobody likes surprise bills, and a TSA without clear pricing is like a hotel minibar—everything costs more than expected. Avoid disputes by using a fixed-fee model or cost-plus structure that ensures fair pricing. Just don't let the parent company charge you a premium for that metaphorical bottle of water.
3. Look out for "Where's My Stuff?" Moments: Plan IT and Data Migration
IT systems can be a tangled mess and moving them is like trying to relocate an octopus—one wrong move and things get messy. A clear data migration plan ensures you don't get locked out of your own systems or spend months chasing access to critical files.
4. Avoid Lawsuits and Data Breaches by Managing Legal and Compliance Risks
Regulatory issues can turn a simple carve-out into a corporate soap opera. Ensure your TSA covers data protection, legal obligations, and dispute resolution—because nothing says "bad deal" like an unexpected lawsuit or cybersecurity incident.
A well-structured TSA is like a great farewell party—everyone leaves happy, there are no hard feelings, and most importantly, nobody has to come back for their lost belongings six months later. Plan wisely, and your carve-out will be smooth sailing!
Plus, explore some of Riveron's carve-out success stories:
- Executing a Division Carve-out at Lehigh Hanson
- Navigating the Carve-out Process for a Payment Processing Provider
- Executing a Carve-out and Back Office Stand Up for a Mid-Market Apparel Company
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.
