Carve-Out

Expertise

A carve-out is the spin-off, separation or sale of parts of a company. Carve-outs are usually complex processes as they can often take up to three years to implement (from initial idea until actual separation). Generally the parent company remains the sole shareholder at first, though in many cases a carve-out process serves to prepare for a disposal to a third party or even an initial public offering.

Several crucial questions have to be answered while daily business is ongoing:

  • What is the "right cut" between the parent company and the carved-out entity?
  • Which services (e.g. IT, accounting, controlling) need to be guaranteed for a transitional period? Which service level agreements (SLAs) therefore need to be agreed upon?
  • What is the overall carve-out master plan and how is the transition period structured?
  • How can key employees be retained?

References

Carve-out concept for an energy supply company:

  • Identifying relevant support functions
  • Concept development for critical functions ("day 1 functions" to be built up autonomously right from the start vs. services provided by the parent company for a transitional phase)
  • Resizing the organization and defining service concepts with specific service level agreements