Carve-outs are the open-heart surgeries of business. One wrong move — and the patient bleeds cash, customers, or talent.
Here’s what separates smooth carve-outs from painful ones.
1. Start with a clear scope and end-state
Define:
- What’s in scope?
- What’s the NewCo’s minimum viable setup?
- What must be ready by Day 1?
Ambiguity here creates chaos later.
2. Plan with functions — not just for them
Finance, IT, HR, Operations, Sales… each team needs to co-design the carve-out.
This avoids surprises and ensures ownership.
3. Build your TSA logic early
Don’t treat TSAs (transitional service agreements) as an afterthought.
Agree early:
- What services are needed
- For how long
- At what cost
- With what exit logic
4. Address organizational identity
The NewCo isn’t just a legal entity.
It needs:
- A leadership team
- Roles and processes
- A minimum culture and communication backbone
5. Don’t skip the culture and compliance dimension
Align values, define behaviors, and ensure legal basics:
- Contracts
- IP rights
- Licenses
- Data ownership
- Code of conduct