TSA Pre-Signing Review
A buyer side TSA review. Before the deal closes.
Fixed-fee proposal in 48 hours. Senior team on day one. The first conversation is always free.
Industrial manufacturing carve out TSAs carry physical workstreams that pure services deals do not. Shared plants, shared utility infrastructure, shared raw material supply, shared logistics, MES and ERP cuts that affect daily production, and EHS continuity all sit inside the service catalog. The work runs inside the broader carve out advisory framework with industrial overlays that change the timeline and the risk envelope.
Most industrial carve outs include sites that are not cleanly split. A plant that produces Newco products and seller products on shared lines. A campus where Newco occupies one building and the seller occupies the others. A warehouse that ships both Newco and seller inventory. Each shared site requires a defined arrangement that survives Day One. The TSA service catalog covers utilities, security, environmental health and safety, plant management, and shared services.
Real estate often dominates the negotiation. Seller owned sites where Newco operates require leases or operating agreements. Newco owned sites where the seller operates require reverse arrangements. Third party leased sites where both parties operate require landlord consents and revised lease terms. Each scenario carries tax, accounting, and regulatory implications that the deal team works in parallel with the TSA.
Utilities and infrastructure metering need explicit treatment. Plants share electricity, natural gas, compressed air, water, steam, and chilled water. The carve out either installs new meters that split consumption at the source, or applies engineering allocations to a shared meter under audit. The right answer depends on cost, time, and whether the site will eventually fully separate or run permanently shared.
Environmental health and safety responsibilities have to be explicit. Permits, monitoring, reporting, and incident response sit with named parties at each shared site. The buyer side TSA review confirms that the seller is not assigning EHS exposure to Newco without proportionate authority. The framework pairs with the carve out Day One readiness playbook.
Industrial supply chains rely on suppliers that serve both Newco and seller. Raw materials, packaging, components, sub assemblies, maintenance, repair, and operating supplies all flow through long standing supplier agreements. The seller will not assign a master supply agreement that covers products outside the carve out scope. Newco re papers each agreement under its own legal entity, often with revised pricing because Newco volume is lower than the original combined volume.
Supplier consolidation savings that the seller earned on combined volume disappear at separation. The buyer side review models this stranded cost honestly. The TSA may carry a transitional supply arrangement where the seller continues to procure on behalf of Newco at the combined volume price for a defined period. The arrangement carries a pass-through pricing structure with audited cost transparency.
Single source suppliers add risk. Where a supplier is the only viable source for a critical input, the carve out has to confirm the supplier will continue to serve Newco under acceptable terms. The diligence covers credit, capacity, geographic coverage, and the supplier negotiating posture. A single source that pivots away from Newco at separation is a Day One supply risk.
Inventory transfer at close is a separate work stream. Raw material, work in process, and finished goods inventory at the carve out sites is valued, counted, and transferred per the purchase agreement. The reconciliation often runs months after close. Discrepancies become disputes. The TSA section on inventory recovery sets the dispute process and the timing.
Manufacturing execution systems run the shop floor. SAP MES, Rockwell PharmaSuite, AVEVA, GE Proficy, and other platforms control production orders, traceability, quality records, and operator workflows. The seller will not extend the MES across legal entities indefinitely. Newco builds its own instance or migrates to a different vendor with the production model rebuilt around the Newco operating model.
The ERP cut is sequenced with the MES cut. SAP ECC, S/4HANA, Oracle, or Microsoft Dynamics each have their own carve out approach. The integration layer between ERP and MES has to operate continuously across the cut. Production orders, bills of material, routings, work centers, and inventory locations all migrate as structured master data. The work aligns with the carve out ERP strategy framework.
Production loss during cutover is the most visible failure mode. The runbook covers the freeze window, the data migration, the configuration validation, and the parallel production trials. The plant operations team rehearses the cutover against a non production environment before it commits to a production weekend. Hot fixes are pre staged and named owners are identified for every plausible failure mode.
Quality systems carry regulated workflows that have to survive the cut. Calibration records, deviation records, change control records, complaint records, and CAPA records all migrate to the Newco quality system. The transfer is audited by the Newco quality function and signed off before production resumes on the new system. The discipline is absolute in regulated sectors.
Logistics relationships move from seller to Newco. Freight contracts, warehouse contracts, customs broker contracts, drayage contracts, and small parcel contracts all require re papering or assignment. Volume based pricing recalculates against Newco standalone shipments. The buyer side review surfaces the rate increase and models it into the Newco operating budget for the first 24 months.
Customs and trade compliance carries product specific authorizations. Importer of record numbers, harmonized tariff classifications, free trade zone designations, duty drawback authorizations, and export licenses all reissue under the Newco entity. The trade team builds a country by country plan that overlays the legal entity registration and the customs broker reassignment. The work runs in parallel with the banking and treasury workstream.
Customer continuity drives commercial decisions. Long term supply agreements with industrial customers, distributors, and original equipment manufacturers have to assign cleanly or re paper. The Newco commercial team and the legal team work the assignment list with the deal team. Customer service interruptions during the transition create revenue risk that is hard to recover.
Aftermarket service and warranty programs also rebase. Spare parts inventory, field service agreements, warranty obligations, and product recall logistics each have their own transition plan. The buyer side review documents who owns historical warranty exposure and how that exposure is funded after close. A poorly drafted clause here creates a permanent liability for Newco.
Industrial TSAs are negotiated under operational complexity. The seller has 30 years of plant level history. The buyer rarely has the time or the data to match that knowledge before signing. The buyer side review brings an industrial specific TSA checklist into pre signing diligence. Shared utility metering. Single source supplier dependencies. MES and ERP cut feasibility. EHS license reissuance. Customer assignment risks. Each item gets a buyer side estimate of cost, time, and risk.
Extension fee structures in industrial TSAs default to seller favorable curves because manufacturing system migrations often run longer than the buyer plans. The buyer side review rewrites the extension language to reflect a realistic Newco runway. The work pairs with the pre signing leverage playbook.
Service catalog pricing reflects the operational nature of the work. Shared plant management is not a generic IT service. The cost-plus pricing has to reflect actual cost, not a percentage of total seller plant overhead. The audit rights section ensures Newco can validate the allocation method through independent records. Where the seller resists transparency, the negotiation escalates before the deal closes.
Industrial carve out TSA reviews and exit programs are delivered under a Fixed Fee + Portfolio Retainer engagement model through TSA pre signing review and the Day One readiness program. The industrial overlay raises the timeline and the complexity. The discipline is the same.
HIPAA boundaries, EHR separation, and payer credentialing for a healthcare Newco.
Read the article →Code base separation, multi tenant unwinding, and the customer continuity plan.
Read the article →The PE specific carve out approach and the value creation overlay.
Read the article →The 90-day governance, IT, finance, HR and procurement separation plan we run on live carve-outs. Get the playbook plus the bi-weekly Day One Letter — short, signal-heavy, buyer-side.
No spam. Unsubscribe in one click. · Read the overview first →
Fixed-fee proposal in 48 hours. Senior team on day one. The first conversation is always free.
Seven buyer-side moves to exit a Transition Services Agreement on time and below budget. The mark-up, the extension-fee curve, exit sequencing, and the 11-month calendar.
A representative $200M-revenue manufacturing carve-out runs a Transition Services Agreement across nine functions while three plants keep shipping. The moves below cut the exit from an 18-month drift to an 11-month managed exit and remove $3.0M of mark-up and stranded cost — without stopping a single production line.
One tactic, one benchmark, or one pattern from a recent buyer-side engagement. Short. Signal heavy. Free.
Subscribe to The Day One Letter →