Separation advisory has been saved
Divestitures aren’t just mergers in reverse
Companies sometimes sell a business in order to refocus on their core business or as part of active portfolio management. A separation of a division of business unit from a larger group ("carve-out") can be a complex task. Deloitte can support this process end-to-end, covering operational, financial, tax and legal aspects.
Are you looking for the optimal way to separate a division and get the maximum value from a transaction? Based on our extensive experience, Deloitte can advise during the preparation and implementation of complex carve-out transactions in a fast, efficient and high-quality manner.
A regular M&A transaction brings with it the necessary challenges; however, the complexity of a transaction increases if there is a carve-out situation.
The business unit that is to be separated is in many cases integrated with your current business operations (for example, shared services for Finance, IT and HR) and you are looking for the optimal way to separate the business unit and extract the maximum value from the transaction. We use our experience to help you answer questions such as:
- What does the stand-alone organisation look like and what needs to be arranged at what time?
- What should you pay attention to before, during and after the carve-out?
- What would the standalone cost levels be and what levers are available to optimize?
Historical financial data for the carve-out business are often incomplete; For example, there is a profit and loss account for the unit for sale but balance sheet information is lacking. In such a situation, splitting the financial administration and (properly) allocating sales, costs, assets and liabilities to the activities to be divested can be a time-consuming and complex process. The impact of the split on the cost structure and working capital of both the selling and the carve-out entity must also be carefully mapped out.
Deloitte has ample experience in delivering carve-out financials and uses proprietary tooling to enable robust, efficient and quality delivery, while the deal aspects of the financials are well thought through by experienced M&A professionals.
Our team is highly experienced in supporting all financial aspects of a carve-out transactions, from initial preparations up to final deal settlement.
Tax & Legal
Although the business decisions are leading, tax and legal will be important drivers in carve-out transactions. The carve out and remaining business are often held by the same legal entity which requires legal separation steps. We can assist by designing and implementing a flexible and future proof structure in line with the envisaged separation. The carve-out steps will be aimed at mitigating immediate tax impacts as much as possible and preserving available tax attributes available within the structure. Our carve-out structuring reports can be used by the various (business) stakeholders.
As the market leader in carve-outs, Deloitte has supervised the most prominent transactions in recent years. With our knowledge of carve-outs we create maximum value by offering support in the following areas:
- Defining the scope of the separation perimeter and the complexity of the proposed divestiture
- Selecting and/or preparing the Separation Director
- Setting up the separation programme, governance and stakeholder management
- Working alongside the M&A deal teams to prepare the entities for an operational carve out
- Preparing a Seller information document and/or operational handbook for the Seller
- Preparing carve-out financials, financial, tax and operation vendor due diligence reports as well as tax structuring papers
- Developing detailed separation plans and supporting the development of solutions and resolution of issues
- Developing TSA schedules and working with the functional owners to operationalise the services, as well as setting up governance and monitoring approach
- Advising Separation Directors and key project managers
- Planning and managing the detailed separation with functional experts and central coordination, and ensuring an issue free Day 1
- Mobilising and co-ordinating the project teams around a well-structured and managed separation programme; and
- Managing people issues, change management and separation communication
The Deloitte team brings the required expertise and capacity to supplement and unburden your organization. Well prepared, consistent and solid information contributes to a smoother process of a carve-out transaction.
Maximum realisation of the sales value, minimal transition risks and effective addressing of lagging costs as a result of the carve-out transaction, by:
- Ensuring clarity of scope and target state vision
- Enhancing discipline and control through content-rich, knowledge-based program management
- Reducing risks and issues, by staying ahead of the issues and deep experience to support swift resolution
- Reducing disruption by focusing on people and change management
- Retaining customers and employees through rigorous execution of customized playbooks; and
- Reducing stranded costs by confirming SG&A details don’t fall between the cracks
- Delivering all documentation to facilitate a high-quality M&A process
By joining forces with Deloitte, you gain access to proven methodologies and draw on the experience of local experts as well as the international expertise of the professionals from our global Deloitte network.
Being part of Deloitte Transaction services, we work closely with our Financial (Vendor and Acquisition), Operational, Commercial and Technology (IT) Due Diligence, Corporate Finance, Debt Advisory, PMI teams, to provide you with our integrated insights into each stage of the M&A life cycle. We also leverage the audit, risk management, and tax services of Deloitte’s network to bring additional resources to our Separation engagements.