Divestiture of a captive and arranging an outsourcing agreement
Refocus on core business
CoreLogic, a US-based provider of consumer, financial, and property information, analytics, and services to business and government, was seeking to achieve greater flexibility, global scalability, higher effectiveness and efficiency of existing operations, development of new tools, technologies, and processes to support and grow CoreLogic businesses through the sale of its India captive operations and a long term outsourcing agreement with a strategic buyer. Deloitte was engaged to help.
In order to refocus on its core business, the CEO of CoreLogic sought to achieve the following strategic objectives for the company:
- Establish a global delivery model to help CoreLogic expand geographically through access to a talented available global resource base
- Enhance the efficiency and effectiveness of the businesses’ current IT platforms
- Increase the flexibility of the cost base in order to enhance operational efficiency and improve its bottom line
One of the major initiatives to achieve these objectives was the divestiture of its India captive operations, which included:
- Business and financial modeling
- Capturing current key operating metrics
- Developing the financial construct for the sale
- Enabling a seamless transition plan from captive to third-party relationship
How we helped
Over an eight month period and multiple phases of the project, Deloitte deployed a team of skilled practitioners from various service lines including Strategy & Operations Consulting, Human Capital Consulting, Accounting, Tax Advisory, and Corporate Finance. The “One-Deloitte” advantage translated to a short ramp-up to get the project launched, streamlined communications, and leverage of multiple service lines to help the client reach advantageous terms on both the sale and long-term master professional services agreement quickly.
Deloitte provided the information and resources to help the client in the following aspects of the project:
- Develop a Master Professional Services Agreement (MPSA), which enabled CoreLogic to develop specific service definition and a flexible cost base through the outsourcing agreement terms
- Negotiate Share Purchase Agreement (SPA), which allowed CoreLogic to release capital to be used elsewhere in its operations
- Manage the Communications and Change Management throughout the deal and related transition
- Establish a Vendor Management Program Organization (VMPO) to manage the relationship on an on-going basis
Given the complexity and uniqueness of the deal, Deloitte brought in a mix of specializations, experience, and established processes in strategy, outsourcing, change management, tax, and corporate finance. Deloitte’s work enabled the client to:
- Effectively down select a strategic partner and negotiate the deal to secure up-front cash and service credits to reinvest in its business
- Decrease recurring fixed costs and set up seven year outsourcing agreement with partner
- Generate interest from new clients post-deal announcement
This was a complex project that required a high degree of interaction between Deloitte, CoreLogic management, subject matter specialists, attorneys, and the strategic buyer. A good working relationship was critical to achieving the objectives.