Technology Carve-outs
Special considerations for carve-out transactions
Technology carve-outs—separating technology assets from a parent company—present unique challenges requiring specialized assessment approaches.
Carve-out Challenges
1. Shared Infrastructure
- Shared IT systems and platforms
- Common security infrastructure
- Shared data centers or cloud accounts
- Enterprise licensing dependencies
2. Entangled Applications
- Shared codebases
- Common databases
- Integration dependencies
- Shared APIs and services
3. Data Separation
- Identifying which data belongs to the carved-out entity
- Data privacy and consent considerations
- Historical data access needs
- Ongoing data sharing requirements
4. Team Allocation
- Shared team members
- Knowledge transfer needs
- Transitional service agreements
- Retained vs. transferred personnel
Carve-out Assessment Focus
- Separation complexity and timeline
- Stranded costs and dis-synergies
- TSA requirements and costs
- Standalone viability assessment
- Day-one operational requirements
TSA Considerations
Transitional Service Agreements should cover:
- Specific services provided
- Service levels and SLAs
- Duration and exit criteria
- Pricing and true-up mechanisms
- Knowledge transfer requirements
Key Takeaway: Carve-outs often take longer and cost more than expected. Build significant contingency into separation timelines and budgets.