Doing a Deal from the Inside Out: Preparing for Transition Services Agreements

more+
less-

The second article in this series discussed the importance of the seller’s self-assessment process in preparing for a transaction as well as how to effectively collaborate with outside advisors and internal clients to maximize potential value and negotiation advantages in a transaction. There are few areas where these advantages are as immediate and crucial as in the case with transition services.

When a transaction involves the sale or purchase of a subsidiary or a division of a larger corporation (the target business), the buyer and the seller many times encounter a situation where services essential to the target business are provided not internally by the target business itself, but rather are provided as part of an enterprise-wide operation. Consequently, the sale of the target business does not include these operations, which likely are essential to the day-to-day operations of the target business. Most commonly, the buyer and the seller address this situation using a mutually agreed transition services agreement.

Scope of the Agreement

A transition services agreement is an agreement between the buyer and the seller under which the seller typically agrees to provide certain shared services to the buyer for a short or transition period following the closing of the primary transaction. An appropriately contemplated transition services agreement allows the transaction to proceed without the potential delay caused by a buyer securing those services on its own. Avoiding such a delay helps ensure a smooth transition to the buyer and its newly engaged employees and preserves the value of the enterprise just purchased. Since a well-conceived transition services agreement may be of crucial importance to the buyer, the wise seller will contemplate it in advance of the transaction negotiations.

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Sutherland Asbill & Brennan LLP | Attorney Advertising

Written by:

more+
less-

Sutherland Asbill & Brennan LLP on:

Popular Topics
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
×
Loading...
×
×