What are the Benefits of Outsourcing Carve-out Support?
According to a recent study by Deloitte, 49 percent of M&A professionals in the private equity space are planning to spin off a non-core division in 2023 – which means you can expect to see divestitures increase in the coming months as businesses work to solidify and execute deals.
If you’re considering a spin-off, carve-out or other private equity transaction, it’s essential to find a trusted partner to help you streamline the process, reduce complexities and drive success. As experts in helping businesses maximize the value of a deal, we’ve outlined some of the main benefits of outsourcing carve-out support.
What is carve-out support?
Carve-out support involves guiding an organization through the process of separating an area of business (re: asset, interest or investment) from the parent company and selling it for a profit.
This process can be quite complex, as it requires a lot of strategic up-front planning and coordination in order to successfully disentangle the carve-out entity while retaining its competitive market edge.
Common carve-out activities & steps:
- Defining the scope and objective of the carve out and developing a project roadmap for the separation of entities.
- Addressing legal and regulatory requirements by conducting due diligence and implementing measures to ensure compliance.
- Evaluating financial performance and determining assets, liabilities and capital structure.
- Outlining the separation of the carve-out entity from the parent entity, including plans for operational, IT and infrastructure combinations or changes.
- Transitioning workforces and hiring additional support as needed.
- Separating IT systems from the parent company and the carve-out entity.
- Establishing effective change management processes to ensure employees are supported throughout the course of the transaction.
- Integrating the carve-out entity into a new organization or preparing it to be sold for a profit.
Benefits of Outsourcing Carve-out Support
- Provides access to unparalleled expertise and strategic guidance
- Streamlines project management and process efficiency
- Eliminates the potential for risks & issues to arise
- Optimizes costs
- Reduces time to close
- Drives successful collaboration with investors, teams and other stakeholders
Provides access to unparalleled expertise and strategic guidance needed to drive carve-out success
Successfully separating one entity from another requires specialized knowledge and an ability to skillfully maneuver the many complexities and road bumps that can arise during the carve-out process.
From understanding how to separate systems and operations to conducting the strategic, high-level planning needed to ensure a maximization in value, outsourcing carve-out support provides access to the expertise you need to drive success and ensure the transaction aligns with your overall business goals.
Streamlines project management and process efficiency throughout the carve-out process
As carve-out transactions require careful coordination across many areas of business, it’s essential to have a solid project management process that eliminates redundancy and ensures tasks are executed in a timely manner.
Outsourcing carve-out support means you’re getting access to a skilled project manager who will work closely with your team and high-level executives to establish a project roadmap, ensure key deadlines are met and manage the entire scope of the carve-out so you have more time to focus on your day-to-day.
In addition, hiring a carve-out support consultant is essential for identifying bottlenecks ahead of time and integrating the right measures to overcome them, helping to optimize operations, processes and systems for maximum efficiency.
Eliminates the potential for risks & issues to arise during a carve-out
Outsourcing carve-out support helps eliminate many of the risks that can arise: operational interruptions that lead to a lack of productivity and collaboration, a decrease in employee morale or customer satisfaction, IT integration challenges that affect data security, and countless other types of issues that come alongside the carve-out process.
Hiring a carve-out consultant will allow your organization to proactively address these issues and reduce their negative impacts, as the consultant will conduct thorough risk assessments, develop stronger due diligence strategies to safeguard your business, and closely monitor project progress to help drive success at every stage.
Optimizes costs associated with the carve-out process
There are many costs that come alongside a carve-out: legal fees, project management expenses, and the management of other financial complexities that affect tax, accounting and reporting functionalities.
Outsourcing carve-out support often leads to cost optimization as your consultant works to strategically manage funding from investors, eliminate redundancies, identify potential tax advantages and ensure resources are allocated to where they’re most needed.
Reduces time to close
The longer the carve-out process goes on, the more room there is for issues to arise – and the more money, time and resources you’ll have to spend to overcome them.
Having a faster time to close helps maintain business continuity, drives cost optimization, minimizes risk, and eliminates the potential for issues to arise, ensuring that management can retain focus on strategic business development rather than wasting time on matters that could have been avoided.
Outsourcing carve-out support from the get-go reduces project delays and establishes process efficiency, helping to ensure a faster time to close while avoiding problems along the way.
Drives successful collaboration with investors, teams and other stakeholders
Disentangling a carve-out entity from the parent company requires streamlined communication with investors, employees and other stakeholders, as everyone must be kept informed of key project milestones so they can successfully conduct their respective duties.
A carve-out consultant provides the expertise you need to identify areas of collaboration, eliminate redundancy and integrate systems and processes to ensure communication occurs in a timely manner – all of which helps to cultivate trusted relationships with investors and stakeholders.
Final Thoughts on the Benefits of Outsourcing Carve-out Support
Even if you already have a skilled team of financial experts, project managers and IT implementation specialists, the carve-out process still tends to go awry without the right oversight.
Separating people, processes and systems requires a keen eye for detail and a profound knowledge of how to execute private equity transactions with limited interruption. For best results, consider hiring a carve-out consultant to streamline the process, establish a cost-effective approach and help you maximize the value of a deal.
Bridgepoint Consulting has a team of carve-out experts ready to assist you by providing:
- Interim or fractional CFO support to manage tactical execution
- FP&A and other project specialists to forecast and deliver technical analysis for management and auditors
- Cloud evaluation and systems implementation and integration experts
- Cybersecurity planning teams
- NetSuite implementation and integration
Need Carve-out Support?
Whether you are navigating a potential deal or nearing a close, your primary focus is on realizing its perceived value. With inherent complexity at every phase of the dealmaking journey, our team at Bridgepoint Consulting alleviates the challenge of tracking down real-time data and metrics across your portfolio companies by consolidating and transforming these elements into high-performing processes so you can deliver on your investments.
Contact us today or learn more about how we can help at the link below.