Our Accordion Take: Carve-outs present boom-or-bust chance for PE
Addressing PitchBook's Article:
This PitchBook article couldn’t be more timely. At Accordion, we’ve had overwhelming demand from clients for executing (and integrating) a carve-out. We like to say carve-outs are the curveballs of the M&A landscape, given their, often hidden, complexities.
And so, while there are a number of variables to keep in mind, there are two that we tell our clients will be critical to eventual success:
- TSA: The 3 most important letters in any carve-out scenario. Crafting a thorough Transition Service Agreement (in terms of scope, duration and cost) can be a critical benefit, or disastrous oversight, for both the buyer and the seller.
- Operating Model Clarity: Another variable to scrutinize (and create realistic expectations around) is the standalone entity’s operating model and financials. Once the entity is set up apart from the parent, will it be merged with another entity or stood up as its own company? Understanding, in detail, the ultimate operating model and cost structure will offer the PE buyer optionality post-close.”
Executing a carve-out? We can help.
PitchBook: Carve-outs present boom-or-bust chance for PE
The percentage of North American and European carve-outs being conducted by buyout firms is rising for a variety of reasons.Read on pitchbook.com