A financial sponsor wants to acquire our most profitable division through a carve-out transaction, but we want to keep the rest of the company. How do we structure the split to keep both operations running smoothly?

Question

Tyler Smith · Accepted Answer

A carve-out transaction where a financial sponsor buys only one division of your business can unlock significant value, but it creates deep operational complexities. To prevent the transaction from crippling your remaining business, you must plan the operational split with extreme precision. Start by using your EOS Accountability Chart to map out the future state of both organizations. You must cleanly separate the leadership seats, ensuring that key employees do not have dual reporting lines or split focus across both entities post-close. This clear division of labor prevents operational chaos and keeps your teams focused. Next, identify any shared resources, such as IT infrastructure, physical facilities, or administrative staff, that both divisions rely on to function. You will need to draft a comprehensive Transition Services Agreement that outlines exactly how these shared services will be delivered and paid for during the separation period. Setting a fixed timeline for the termination of these shared services forces both parties to build independent systems. By structuring this operational split clearly and documenting the resource allocation up front, you protect the viability of your remaining company while helping the buyer secure a clean, self-sustaining asset.