Miss the TSA Deadline on This Carveout and It Costs $750,000 a Month. This One Didn't.

A private equity firm acquired a full HVAC service and product vertical from a Fortune 200 manufacturer with plans to operate it as an independent PortCo. The transaction came with a 12-month TSA and more than $750,000 a month in stranded costs waiting on the other side of the deadline. Every system the business relied on had to be separated, rebuilt, tested, and running before the TSA expired. 

This work was performed by Liberty Advisor Group, now a Resultant company. 

A business built inside someone else's technology

Like many carveouts, the business had never operated on its own. Core financial and operational systems, user accounts, infrastructure, and more than 100 business applications were deeply integrated into the parent's enterprise environment. Approximately 1,500 employees depended on systems that had never been designed to stand alone. 

Every dependency had to be identified, separated, and rebuilt (not copied or cloned) without interrupting the business or extending the TSA.

The same team that supported technology diligence managed the execution engagement. That continuity eliminated the learning curve that often occurs when implementation is handed off to an entirely new firm and allowed execution to begin with an informed transition plan already in place.

Giving buyers the information the financial CIM couldn't

Over the course of the separation, the team built a new technology environment capable of supporting the business as a standalone company. The work included new network infrastructure, hosting, service desk capabilities, IT staffing, and the migration of more than 100 business applications. 

Every application was transitioned, tested, and operational by the end of the TSA. The separation finished on schedule with minimal disruption to employees and day-to-day operations. 

The outcome

Meeting the TSA deadline avoided more than $750,000 a month in ongoing costs to the parent company while delivering the independent business the buyer expected to own. The value the PE firm realized was in removing a growing financial obligation before it affected returns and positioning the PortCo to begin operating independently, on schedule.

Have a carveout with a TSA clock already running?

Insights delivered to your inbox