Raptor Partners actively advises clients on the carve-out or sale of non-core or non-strategic divisions, product lines or manufacturing facilities. The professionals work with clients to analyze: (i) the potential value of the carved-out entity in a sale transaction; (ii) the ability to reallocate capital to support other strategic objectives; and (iii) the potential disruption to the core business.
Raptor Partners’ professionals have helped its clients successfully complete corporate carve-outs in the U.S. and abroad in highly complex situations. When investigating the potential for a corporate carve-out, it is highly recommended that a company engage the assistance of a financial advisor with experience on these types of transactions.
Carve-outs are completed for a variety of reasons including:
- Reallocation of capital to core operations
- Orphan division in need of greater attention and capital to prosper
- Free-up management resources
- Deleverage with the proceeds of a sale
- Trade regulation requirements
Corporate carve-outs are intricate corporate transactions. Significant time and attention are needed to successfully complete carve-outs. Complexity arises from the fact that, in many situations, a highly integrated business unit needs to be separated from its parent company, without damaging the core operations. Sellers must deal with numerous complications in these transactions related to co-mingled resources, including: facilities; IT systems; distribution contracts; vendor contracts; financial reporting; inventory; and employees. Significant advance planning on any carve-out transaction is critical to a successful transition.
Transition Services Arrangements
Transition service contracts are critical components of corporate carve-outs, particularly where the operations of the division are integrated with the parent company. In order for a successful carve-out transaction, the scope of transition services should be carefully coordinated between both the buyer and seller. Transition service agreements can encompass IT support, ERP system transfer, supply agreements, lease agreements, distribution agreements, field service agreements and tolling arrangements, among others.