Accelerating Value Creation in Buy-side Carve-outs

Proven Strategic and Tactical Guidance for Rapidly Separating and Standing Up IT

For buyers, carving out an acquired business from its parent is a high-risk process that typically involves some form of business transformation in order to achieve the deal’s expected value within the investment horizon. The keys to maximizing value creation in such transactions are certainty, speed and cost-effectiveness. Separating and standing up the IT components of the carved-out business can be one of the most complex, disruptive, time-consuming and costly parts of these types of transactions — making it a critical lever in the value-creation equation.

Often, the IT separation/transformation can set the critical path for the entire process. Fortunately, IT products and services have evolved to the point where — with the right knowledge and experience — IT carve-outs can be achieved far more predictably, quickly and cost-effectively than in the past, resulting in accelerated time-to-value.

Based on years of experience, here are some strategic (upfront analysis and planning) and tactical (implementation and execution) IT accelerators FTI Consulting recommends to accelerate value creation through technology.

Strategic Carve-out Accelerators

IT Due Diligence — Perform IT due diligence early, together with financial, commercial and operational due diligence. Give careful consideration to IT operations shared with the parent company vs. the carveout’s specific business processes, systems and data needs. From this, identify all of the sources of technological entanglement with the parent early. Up-front analysis of these elements, with the investment thesis in mind, will enable you to identify and quantify separation and stand-up complexity, resource requirements, timelines and costs. The knowledge gained from this analysis will allow you to negotiate and plan appropriately to address these elements as early in the transaction as possible.