When an international group sells a business unit, the transition services agreement (TSA) is only as good as the systems and data work behind it. Doing that work upfront is what secures the sale.
The situation
An international company was carving out a business unit. The buyer needed to run the business from day one, and the seller needed to keep running its own. Between the two sat around 100 systems, each of which had to be transferred, provided as a service for a period, or have its data migrated.
Our role over six months had three parts:
- Programme Director support: a single view of scope, dependencies and decisions across the separation.
- Carve-out project management for the key systems: ERP, finance, CRM and the other systems the business could not run without.
- TSA elaboration: defining the services for roughly 100 systems, and managing their operation and transition.
Why the TSA depends on the systems
A TSA that lists services without reference to the systems and data being transferred leaves the real questions open: what moves, what stays, who runs it in between, and what it costs. Preparing the TSA in alignment with the systems and data transferred takes significant effort, and it cannot be left until after signing.
The TSA is not a schedule of services. It is the agreement that decides how each system, and its data, changes hands.
For each system, the work comes down to a choice between three strategies:
- System transfer. The system, and its licences, move to the buyer.
- Transition service. The seller keeps running the system for the buyer for an agreed period, with defined service levels and an exit date.
- Data migration. The buyer takes the data, and the system it needs to run on is stood up on the buyer's side.
What the upfront work secures
- The sale. A clear separation perimeter and a credible transition plan remove the uncertainty that otherwise reaches the price discussion.
- The investment. Once each system has a strategy, the cost and effort of the transfer can be sized rather than estimated.
- Control of the agreement. The transaction agreement reflects what will actually happen, with each system covered by the strategy that suits it.
Three areas that need the most attention
- ERP. Supplier relationships, continuity of service, and the finance processes that run through it: accounts payable, accounts receivable and procurement. The payment transition is where continuity is most easily broken.
- HR. Sales commission and payroll. Both are time-critical, both touch every employee, and neither tolerates a gap.
- Enabling systems and IT infrastructure. The sheer number of supporting systems, and the transfer of licences, which depends on supplier terms agreed long before the deal.
The three strategies compared
| Strategy | What happens | What to watch |
|---|---|---|
| System transfer | System and licences move to the buyer | Licence terms, dependencies on shared infrastructure |
| Transition service | Seller runs the system for the buyer for a fixed period | Service levels, cost, a firm exit date |
| Data migration | Buyer takes the data into its own systems | Data quality, cut-over timing, reconciliation |
What to take from it
Carve-outs rarely fail on the big decisions. They fail on the long tail: a payment run that does not happen, a commission that is not paid, a licence that cannot be transferred. Mapping every system against a strategy, early, is what turns that tail into a plan.
How Yone helps
Acquiring a business
We map how the target runs, size the separation, and prepare the TSA and the Day 1 plan, working to your deal timetable and reporting to your team.
Working on a target?
Tell us about the deal and the timetable, and we will scope the operational diligence.