2021-11-17-科尔尼-Secrets_of_a_successful_carve-out_7页_766kb

Summary of "Secrets of a Successful Carve-Out"

Core Content

Carve-out transactions, which involve the sale or divestiture of a division or business unit, are more complex and require greater attention to detail than typical mergers and acquisitions (M&A). Despite this complexity, they offer significant advantages for both buyers and sellers, including lower premiums for buyers and a higher likelihood of deal closure for sellers.

Main Points

• Carve-outs are more complex: Unlike standard M&A, carve-outs often involve critical functions (such as IT, HR, and supply chain) that are still dependent on the parent company, necessitating transition services agreements (TSAs) for post-deal support.

• Benefits of carve-outs:

  • For buyers: Lower acquisition premiums, higher returns, and assurance of business continuity.
  • For sellers: Faster exit from transition, ability to refocus on core businesses, and higher fees.

• Key challenges:

  • The need for a comprehensive transition plan that addresses people, assets, services, financials, and contracts.
  • The risk of business disruptions, integration delays, and unforeseen costs if the transition is not properly managed.

Key Information

Guiding Principles for TSAs

• Define the nature of services and fees: Clearly outline what services are required and the associated costs to avoid confusion and ensure clarity.
• Establish a cost base: Use actual cost drivers (e.g., headcount, office space, server utilization) rather than historical or estimated data.
• Set reasonable timelines: Ensure timeframes are realistic and include provisions for extensions and penalties to maintain accountability.
• Use realistic performance standards: Align service expectations with historical performance to avoid overpromising or underdelivering.

Define the Destination

Before drafting a transition plan, it is essential to understand the end-state of the carve-out. This includes:

• Employees: Identify which employees are critical and determine how to manage their transition.
• Assets: Clarify which assets will remain with the seller and which will be transferred to the buyer.
• Services: Define the scope of services the seller will provide and whether the buyer will support the seller.
• Financials: Ensure that the financial statements of the business unit reflect its standalone performance.
• Contracts: Determine which external vendor relationships will continue and how to manage their transition.

Have the Right Resources at the Table

A successful carve-out requires collaboration across multiple departments and teams, including:

• Deal team and project management office: Define objectives, manage negotiations, and coordinate cross-functional activities.
• Legal team: Draft legal documents, manage revisions, and advise on risk management.
• Functional teams: Define end-state objectives, draft service schedules, and ensure alignment between parties.
• Human Resources: Address employee-related issues, including contractual and non-contractual implications.
• Finance: Work on fee structures, invoicing, and payment mechanisms to ensure transparency and clarity.

Conclusion

Carve-outs, while complex, remain a valuable tool in the M&A landscape. By focusing on clear guiding principles, defining the destination, and assembling the right resources, both buyers and sellers can successfully navigate the transition and maximize the benefits of the transaction.

Authors

• Jeff Ward, Partner, Chicago
• Andrés Mendoza Peña, Partner, Chicago

A.T. Kearney

A.T. Kearney is a global management consulting firm with offices in over 40 countries. With a history dating back to 1926, the firm provides strategic and tactical support to help clients achieve their mission-critical goals. For more information, visit www.atkearney.com.