In the run-up to or within the framework of M&A activities , a corporation’s business segments under discussion are often separated organizationally and thus prepared for a possible sale or reorganization. These preparatory actions should take place in a dedicated carve out-process to ensure the positive impact. The reasons for a carve-out are diverse. Strategic goals such as focusing on core competencies or streamlining portfolios often take priority. However, financial reasons (limitation of losses, procurement of liquidity) or operational optimization (e.g. restructuring of vertical integration) also play a role. It is also necessary to take account of carve-outs caused by regulatory requirements.
Complexity of Carve Out-Processes
Carve out-processes are often extremely complex processes. The following factors are the drivers of complexity:
- Dependent business areas
- High number of involved countries and companies/business premises
- Unclear definition of carve-out object
- Heterogeneous IT environment
- Low availability of financial data
- Strong integration in corporation/joint activities
- Complex HR structure
As part of a carve out, existing organizations, workflows and systems must be checked for their validity and optimum support both in the divested business unit and in the spun-off part. We support the spin-off in the course of the reorientation with regard to both the strategy and examination of sustainability in the individual functional areas, and all necessary steps from the planning to the design of the measures and the roll-out of the changes in the planned time frame.
Achievement of Goal in Carve Out-Processes
We at FAS AG will help you achieve the goals of your carve out in a complex situation. Typically, the following goals take precedence:
- Preserving the value during the transaction process and ideally positioning the company in the context of a sale or IPO.
- Minor impairment of business operations due to the commitment of resources.
- Ensuring the desired results such as meeting deadlines/costs and motivating employees through a structured approach and coordination of all carve out-activities.
- Avoiding compliance risks through timely addressing
- Bridging resource bottlenecks with regard to the prospective buyer/partner
Phases of a Carve Out-Process
A carve out-process can be divided into different phases. A phase model proven by FAS AG ensures a structured approach and the success of the process: