Transitional Service Agreement Muster

Keep a customer perspective – During the transition service contract, there will be many situations where the buyer and seller may not agree on the approach, costs or duration. When the situation arises, it is usually best to think about what is best from the client`s point of view. Both buyer and seller have an interest in ensuring that the products and services provided from the divested division remain at the highest level throughout the deal process. No one wants a customer to have a negative experience through the transaction. Unasytified waters. In general, when a buyer and seller have signed a non-binding Memorandum of Understanding (LOI) to acquire a carve-out unit through an asset purchase agreement (APA); due diligence completed; and then reached a substantial agreement on the main terms of an agreement; One of the most important final documents to develop is an agreement on transition services. If a vendor wants to remove a non-strategic business unit, industry, installation, product line, etc., the buyer must literally «distribute» the assets to be divested from the remaining organization, systems, processes, applications and often a very complex and interconnected shared service environment. After the conclusion, regardless of the systems, applications, services or processes that the buyer cannot maintain and operate smoothly immediately after the transfer of ownership, the buyer usually acquires these services from the Seller for a specified period of time. Unfortunately, the devil is still in detail and TSAs usually bedevil both buyers and sellers. While buyers generally want to provide very detailed and specific ASDs based on function, sub-function, system, process and service, all of which are tailored to certain position costs and defined periods, sellers often want the opposite. Difficult dynamics and conflicts often occur, as the gap between what the buyer thought and what the seller will offer will be as pronounced as the Grand Canyon. One customer, a highly developed global acquirer, recently commented: «We launched our TSA as best friends and business partners, but we quickly ended in an open trench warfare.» 7. Start – After the perimeter, price and duration have been coordinated, make a kick-off meeting between the buyer`s, seller`s and carve-out business unit team and start with detailed planning of the closing date and closing operations.

The TSA agreement does not cover all the details and the joint teams will need time to move towards results, formats, workarounds, methods and schedules. In addition to the workshop approach and the steps that followed, this situation has also drawn attention to some of the larger and more strategic lessons of DM that go beyond a particular type of market and that can be useful to any acquirer and any market, but they are particularly important in what many consider to be the hardest of all types of deals – carve-out acquisition.