We want to carve out and sell our automated logistics division while keeping our core advisory business, but both divisions share physical office space, IT infrastructure, and back-office staff. How do we structure the Transition Services Agreement and asset allocation to ensure a clean exit without distracting our core leadership team?

Question

Tyler Smith · Accepted Answer

Selling a specific division while retaining another is a complex operational puzzle. Buyers are rightfully concerned about how the divested unit will function on day one without your shared corporate resources. To secure a premium valuation, you must prove that the transition will be seamless. The key is structuring a robust Transition Services Agreement that clearly defines the services, durations, and costs for shared infrastructure like IT, accounting, and office space. However, you must protect your remaining business from becoming an unpaid, long-term back office for the buyer. Limit the TSA duration to a maximum of six to nine months, and price the services at cost plus a fifteen to twenty percent administrative markup. This provides a financial incentive for the buyer to migrate their systems quickly. Within your own business, use your EOS Accountability Chart to appoint a dedicated transition lead who GWCs the role. This keeps your remaining executive team focused on running your core business rather than firefighting transition issues. Review the transition milestones in your weekly Level 10 Meeting. A well-structured carve-out allows you to unlock the maximum value of your assets without endangering the profitability of your remaining operation.