Transition Services Agreements (TSAs): Approach to De-risk Divestitures

Abstract

The decision to divest a business unit is a key corporate strategy of many organizations. When a company announces a business divestiture, the information technology (IT) systems that support its business processes must be separated as well. Once the decision to divest is made, business and IT operational teams begin evaluating the path to separate the targeted business unit from the remaining organization (the “seller company”). IT starts to analyze the feasibility of completing certain separation activities before the deal is closed. Key challenges include separating systems, data, infrastructure (e.g., LAN, WAN, end-user computing, security), and people identified to go with the divested business. The difficulty to separate is surmountable considering many of the IT capabilities were designed and built to support a shared services structure, not rapid separation.