Tsa Service Agreement

A Transitional Service Agreement (ASD) offers significant benefits when used wisely, such as. B faster conclusion, smoother transition, lower transition costs, better end-of-life solutions and clean separation. However, divestitures that distort the TSA can take much longer than expected. Carveouts are among the most complex transactions. This is particularly the case when it comes to the sale of an integrated industry in the rest of the parent company`s business. In such transactions, the seller may be required to continue to provide the buyer with assistance for critical services after closing. This support is formalized by a Transitional Service Agreement (TSA) and includes one of the documents signed at the time of conclusion (in addition to share and/or asset sales contracts). From the buyer`s point of view, ensuring that an ASD is structured as efficiently as it balances business continuity and ensures support and reliability, while ensuring fair service costs, is a key factor in successful deals. Here are some of the most important considerations in structuring an ASD: defining the magnitude of the TSA is the buyer`s most important decision. Buyer due diligence should be effective in identifying all necessary systems, services and support (e.g., accounting. B, payslip, specific applications, infrastructure, etc.) parent company after the closure, to ensure business continuity and minimal operating disruptions.

A look at TSA services, which are needed via a customer-oriented lens, is a great way to identify the key priorities that allow a seamless transfer from seller to buyer. In addition to the systems, services and support required, due diligence should also focus on large planned projects that could affect the size of the ASD and the key personnel needed to support the TSA. Indira Gillingham, senior manager, and Mike Stimpson, senior manager at Deloitte Consulting LLP, provide practical advice on using ASD to achieve a quick and clear separation. An ASD can expedite the negotiation process and financial conclusion by allowing the agreement to be reached without waiting for the buyer to assume responsibility for all critical support services.

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