The structuring of performance criteria should also include the potential effects of non-performance by third parties involved in the provision of TSA service. Determine in advance whether third-party agreements and licenses with vendors and service providers need to be changed. Practical advice for using Transition Service Agreements (ASDs) to achieve a quick and clean separation. Carveouts are among the most complex transactions. This is particularly the case when it comes to the sale of an integrated industry in the rest of the parent company`s business. In such transactions, the seller may be required to continue to provide the buyer with assistance for critical services after closing. This support is formalized by a Transitional Service Agreement (TSA) and includes one of the documents signed at the time of conclusion (in addition to share and/or asset sales contracts). From the buyer`s point of view, ensuring that an ASD is structured as efficiently as it balances business continuity and ensures support and reliability, while ensuring fair service costs, is a key factor in successful deals. Here are some of the most important thinking in structuring an ASD: Transition service agreements can be extremely difficult to manage if they are not properly defined. As a general rule, poorly developed ASDs give rise to disputes between the buyer and the seller over the extent of the services to be provided.
An effective governance structure can help companies quickly assess and resolve ASD issues. It will enable the Director of Integration to make operational decisions consistent with the TSA guidelines. The governance structure is operational at all stages of the TSA – scoop, negotiation and execution – and the right teams should be available to evaluate service level agreements, ASD prices and payments between the two companies. If third-party licenses or outsourcing agreements are involved in supporting an ASD, they should be included in the pricing – p.B. Cost of the MS Sharepoint license, if the buyer opts for TSA support for the seller`s Sharepoint sites. If the licensing or outsourcing period exceeds the TSA period, renewal costs must also be included in the pricing. Designing and managing transitional service agreements to achieve a quick and clean separation was saved. This agreement has the following advantages: transitional service agreements are common when a large company sells one of its activities or certain assets unrelated to its core business to a less demanding buyer or to a newly created company in which management is present but where the back-office infrastructure has not yet been assembled. They can also be used in carve-outs, in which a large company relocates a split to a separate public company and then provides infrastructure services for a defined period. The price structure of TSA services must be clearly defined and structured, based on well-measurable metrics – z.B for support employees, MIPS for computing power, $/GB for memory, etc. Each TSA service must be independently calculated where possible. Avoid a situation where the price of a TSA service depends on or is related to another TSA service – this will make it difficult to leave individual services without leaving all services.
An ASD is a fairly accurate business example for real events: Mom and Dad help with their son`s expenses for the first few months he works, but pretty quickly he is able to take care of everything on his own.