Divestiture of a Captive and Arranging an Outsourcing AgreementDOWNLOAD |
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Abstract
CoreLogic is a US-based provider of consumer, financial and property information, analytics and services to business and government. CoreLogic provides services in real estate, mortgage application, fraud, loan valuation, flood determinations and geospatial analytics and services. Prior to the divestiture described in this case study, CoreLogic had annual revenues of about $2 billion and around 10,000 global employees (largely in the US and India).
CoreLogic was seeking to achieve the objectives of 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 the client divest its captive, arrange an outsourcing agreement with a strategic buyer and establish a vendor management organization.
The Challenge
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) - This enabled CoreLogic to develop specific service definition and a flexible cost base through the outsourcing agreement terms
- Negotiate Share Purchase Agreement (SPA) - This 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
Solution
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.
The specific phases of the project were as follows:
- Phase I: During this phase the team developed and executed a strategy to down-select two potential buyers/partners
- Phase II: The outcome of this phase was an executed MPSA and Sale and Purchase Agreement.
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 7 year outsourcing agreement with partner
- Establish a Vendor Management Program Office to manage the contract after signature and closing
- 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.
As used in this document, "Deloitte" means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.
Divestiture of a Captive and Arranging an Outsourcing Agreement
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