Transition Services Agreements (TSAs) – Planning Now for Post-Close
Divestiture Survey Report 2013: Sharpening your strategy
Transition service agreements (TSAs) are typically the default option when complex, hurried transactions require the parent company to provide transitional services to the divested unit after a deal closes1. Eighty-seven percent of executives surveyed indicated their companies provide TSAs, but the largest percentage (39 percent) indicated they like to avoid TSAs, but will provide if necessary. Twenty-six percent indicated their organizations like TSAs to facilitate divestiture and manage costs, while 22 percent indicated they are a common practice in order to sign-up buyer.
Companies can benefit by using TSAs as a deal-making strategy. Based on Deloitte’s experience, transition services are a necessary, if undesired, part of many divestitures. Even in situations where the deal team does not want to use TSAs, planning for them avoids the possibility of unfavorable last-minute service negotiations. Companies can be better prepared for Day 1 and reduce risk if they plan for the contingency of using TSAs and then later, if feasible, remove or reduce the scope of services.
Don't lose money on TSAs
When it came to costs, 69 percent of executives surveyed indicated that they had found that cost estimates for TSA services were fairly accurate compared to expectations. Among the remaining executives, 23 percent reported costs were under-estimated, and 8 percent indicated they were over-estimated.
Read more about strategies around TSAs in our Transition Services Agreements (TSAs) – planning now for post-close chapter in our Divestiture Survey Report 2013.
To continue learning about the key insights and findings from our Divestiture Survey Report 2013, access our results in the following ways:
- Explore our interactive PDF and easily navigate from chapter-to-chapter to read about the trends that mean the most to you.
- Download our infographic and learn about some of the key takeaways in the report and the data behind them.
- Access our print-friendly report and read our chapters.
- Read online featured content from additional sections of our report:
- Economic uncertainty makes divestiture planning a challenge
- Strategic factors important in driving divestitures
- Raising the bar – receiving more value from your carve-out
- Finding the “right fit,” at home and abroad – foreign and domestic buyer trends
- Shorten the waiting game – closing your deal
- If at first you don’t succeed…consider putting your business back on the market
1 Source: “CFO insights: Divestitures and Carve-outs: Becoming a Prepared Seller,“ Deloitte, 2010
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