When a business is sold or divested, the seller often enters into a Transition Services Agreement (TSA) with the buyer. TSAs impose obligations on the seller to provide services to the buyer to ensure the acquired business can operate without undue interruption between closing, post-closing, and complete separation. A previous post on this blog discussed key issues the buyer must consider when negotiating a TSA. While these issues remain relevant to the seller, there are additional strategic considerations it should take into account to ensure value is not left on the table.
For years, companies have been increasing profits by outsourcing and engaging third parties to provide business process and information technology services. As well, business units and subsidiaries within companies increasingly integrate systems, share databases and centralize functions to create efficiencies. All of this means that in an M&A deal, it’s important to consider how to address outsourced and shared services before and after the deal closes.
When a business is acquired, many deals will include a transition services agreement (a TSA) to ensure an acquired business can effectively operate during the period between closing and complete separation, and post-closing. … Continue Reading