Carve out
What are the keys to achieving desired results for buyers of carved-out companies? An acquisition of a company under a carve-out scenario offers a set of risks in terms of execution that is vastly different from buying a stand-alone company.
Buyers face their own set of challenges as they frequently have an insufficient understanding of the carved-out company’s dependencies with the parent company that has undertaken the divestiture. In the case of private equity buyers, they also have no infrastructure to replace what the parent previously provided and therefore are required to rebuild.
Therefore, Deloitte offers due diligences on the shared functions and activities with the parent in order to understand better the business requirements, ongoing costs and one-time setup costs for the stand-alone company.
Following key factors are hereby taken into consideration:
- Relative independence from the parent of a business unit planned for a carve-out (shared services)
- Uninterrupted business operations depending on the buyer’s ability to maintain the availability of these services.
- Appropriate transition arrangements to be put in place in order to bridge the stand-alone company until adequate infrastructure can be put in place to replace these services.
- Define prospective standalone company strategies, including business- and function-specific plans to address how services previously provided by the parent will be replaced or eliminated.
- Assess a most cost effective way in order to decrease additional costs.
Analyse before execution
Due diligences result in a synergy review regarding the feasibility of carve-out plans. However, it should be clearly stated that quality of carve-outs result from the execution. Therefore, Deloitte can help you to realise synergy advantages by highly experienced teams who which will assist you during the whole process.
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