We want to sell our most profitable operating division but keep our legacy service business, which shares the same back-office team. How do we split our shared services and structure a clean carve-out that a buyer can easily value and integrate?

Question

Tyler Smith · Accepted Answer

Carving out a single division is highly complex because shared services like finance, human resources, and IT are usually deeply intertwined. A buyer will not pay top dollar if they cannot see how the division will operate on a standalone basis post-close. They will apply a steep discount to cover the operational risk of rebuilding those back-office functions.

To secure a high valuation, you must pre-carve the business before you launch the sale process. Start by adjusting your Accountability Chart. Create a clear division between the people and processes that support the division being sold and those that support your legacy business. If some employees must remain shared during the transition, document exactly how their time and costs are allocated.

Next, prepare a standalone financial statement for the target division. This means stripping out shared corporate overhead and replacing it with estimated standalone operating costs. This gives the buyer a clear, adjusted EBITDA figure that reflects the true profitability of the division on its own.

Finally, prepare to offer a highly structured Transition Services Agreement. Use your operating system's documented processes to define the scope, duration, and pricing of the administrative support you will provide post-close. By showing the buyer a clear operational playbook and a fully documented transition plan, you remove the integration risk and convince them that the division can easily stand on its own two feet.