Transition service agreements are common when a large company sells one of its activities or certain non-essential assets to a less demanding buyer or to a newly created company in which management is present, but where the back-office infrastructure has not yet been assembled. They can also be used in carve-outs, in which a large company relocates a split to a separate public company and then provides infrastructure services for a defined period. Information technology is the most underrated workflow. But for all the transitions we managed, IT used 80% of the budget, schedule and resources. It infrastructure has become so ubiquitous that we now consider it to be electricity. He is expected to be there. In late October 2012, Hurricane Sandy buzzed the northeastern United States, leaving tens of thousands of people without power for weeks. Winter started and people panicked. Generators were scarce and many happily paid thousands of dollars for units that usually cost only a few hundred. The same scenario occurs when basic IT services are no longer available. The intricacies of IT are too numerous to be dealt with here. If I had to prioritize two areas, I would say; Infrastructure and ERP. These elements are the most complex and therefore difficult to transfer, without interruption.
A migration plan agreed in writing before closing can save hundreds of thousands of dollars (if not millions) in terms of real and soft costs. Pharmaceutical carve-outs generally include the agreement of three basic agreements, the SPA (sales and sales contract), the MSA (Master Services Agreement, which covers current deliveries from the facility) and the TSA (transitional service delivery agreement). It goes without saying that it is in the interest of both parties to ensure a continuous operation between the signature and the closing, as well as after the conclusion, with a smooth transition from the seller`s activity to the buyer. An ASD is normally agreed upon when the final agreements are signed, but the practical details and issues are only visible when the buyer`s and sellers` operational teams are activated. However, the postponement of detailed discussions on the TSA increases financial and operational risks, and Murphy`s Law is still in ambush. The key to accelerating the TSA is to know what the high-risk elements are going and this important activity is carried out by a team of experts experienced in these operations who can work with the seller and the buyer`s operational teams. Below is a brief summary of the keys to negotiating a good ASD before the conclusion. The comments and questions that follow make it better to „do things you need to do yourself,“ not „that`s what they need to do to have a successful ASD“ – in addition to the fact that all participants should be communicated to each other and that the agreement should be very detailed. Design and manage transition service agreements to achieve a quick and clear separation, practical advice to consider when using Transition Service Agreements (ASDs) to achieve a quick and clear separation.
