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Case Study

Diligencing for a Carve-Out Pre-Close

Team Size
1 Director, 1 Vice President, 1 Analyst
Project Duration
8 weeks

The Challenge

A Sponsor was pursuing the acquisition of a human resource consulting business to be divested from a $6.5 billion public company. The business generated approximately $280 million in annual revenue through service offerings across the U.S., Canada and the U.K., with certain support functions located in Romania and India. It needed to be successfully separated as a new company, with all “greenfield” operations stood up, including Finance & Accounting, IT and HR. The Sponsor needed subject matter expert review of the pro-forma standalone overhead costs as prepared by the Seller. Additionally, the Sponsor needed support to ensure the transition services agreement (TSA) would allow for a successful separation. The Sponsor engaged Accordion to support these initiatives.

Services

Carve-out Planning & Execution

Finance/Accounting Assessment & Design

The Execution

Findings Report on Standalone Overhead Run-Rate Costs and One-Time Costs:

  • Reviewed the Seller’s pro-forma standalone overhead costs, including suggested modifications used to update final forecast.
  • Conducted Q&A with Seller and its advisors, and attended business diligence meetings with management and the Sponsor.
  • Developed an updated financial model of standalone run-rate costs and one-time carve-out costs.

 

TSA Review and Subject Matter Advisory:

  • Reviewed multiple versions of the draft TSA and service agreements with an eye toward specific services, activities and timelines that would allow for adequate support of the Company during the transition; Worked closely with the Sponsor and attorneys during the negotiation process.
  • Conducted Q&A with the Seller’s functional teams (Finance, HR, Real Estate) to understand the existing roles, responsibilities, time allocation and designated employees.
  • Attended key meetings to discuss drafts of the TSA and service agreements with the Seller’s functional teams and attorneys.

The Results

Accordion provided an updated financial model of standalone run-rate costs and one-time carve-out costs, and worked to achieve a sufficient TSA to ensure the Company has adequate support during the transition period. Our team successfully supported the Sponsor to a signing date, and is currently assisting the Sponsor and Company with post-signing carve-out planning and execution, including support of the Separation Management Office (SMO) and leadership of the Finance & Accounting stand up.