Exit planning the operating partner runs personally.

The four phases of exit planning. Each phase has different operating partner work.

Exit planning runs in four phases. Phase one is design, the first six months post close, when the standalone target operating model gets defined. Phase two is build, months six through twelve, when the standalone capability gets stood up. Phase three is cutover preparation, the six months before the planned exit date, when parallel running and testing happen. Phase four is cutover execution, the weeks around the exit milestone, when services actually transition.

The operating partner has different work in each phase. In phase one, the work is design approval and resourcing. In phase two, the work is removing roadblocks and managing seller dependencies. In phase three, the work is risk acceptance and go no go criteria. In phase four, the work is on the ground decision making during cutover.

The phases overlap. A multi workstream TSA may have the IT workstream in cutover preparation while the finance workstream is still in build. The operating partner tracks the phasing per workstream and adjusts the resourcing accordingly. The work pairs with TSA exit milestones explained.

The four phase model gives the operating partner a way to compare progress across deals. Two portfolio companies both ten months post close may be in very different phases. One may be in cutover preparation. The other may be still in design. The operating partner allocates time to the deals that need the most attention.

Phase one: design the standalone model. Decide what Newco actually keeps.

Phase one is the most important phase and the most underinvested. The standalone target operating model defines what Newco will look like after the TSA. The decisions made in phase one constrain every subsequent phase. A weak design produces a Newco that has to redesign itself a year after exit.

The design covers the application portfolio (lift and shift, replace, retire), the infrastructure footprint (cloud, colocated, on premise), the organization model (headcount, reporting lines, span of control), the vendor stack (which vendors carry over, which get replaced), and the operating processes (finance close, HR cycle, customer support).

The operating partner approves the design before the Newco team starts building. The approval is not a formality. The operating partner pressure tests the design for cost, time, and risk. A design that promises too much cost takeout will not survive contact with reality. A design that takes too long will miss the planned exit date.

The design also names the build out budget. The operating partner approves the budget alongside the design. Once approved, the budget becomes the exit cost layer of the broader TSA budget. The work pairs with operating partner TSA budget management.

Phase two: build the standalone capability. Remove roadblocks, manage seller dependencies.

Phase two is the longest phase. Most carve-out TSAs spend six to twelve months building the standalone capability. The operating partner's work in this phase is two things. First, removing roadblocks the Newco team cannot remove itself. Second, managing seller dependencies that block progress.

Roadblocks usually come in three forms. Hiring delays for key roles. Vendor contract delays for the new standalone vendors. Budget shortfalls when the original build out estimate proves light. The operating partner has authority to fix all three. The roadblocks come on the monthly scorecard. The operating partner addresses them at the monthly review.

Seller dependencies are harder. The seller has agreed to certain handover activities. Data extracts, system access, knowledge transfer, configuration documentation. Sellers in active phase two often deprioritize these activities because they are not contributing to the seller's own operations. The operating partner sets the tone with the seller's senior sponsor that handover is a TSA obligation, not a courtesy.

The buyer-side advisor tracks seller dependencies week by week. Items that slip get escalated to the TSA governance committee. Items that the committee cannot resolve get escalated to the operating partner. The work pairs with TSA escalation procedures.

Phase three: cutover preparation. Parallel running, testing, go no go.

Phase three is the six month sprint before the planned exit date. Parallel running starts: the standalone capability runs alongside the TSA service so the Newco team can compare results. Testing intensifies: end to end process tests, performance tests, failover tests, security tests. The cutover plan gets drafted, reviewed, and revised.

The operating partner's work in phase three is risk acceptance and go no go criteria. The risk acceptance work decides which residual issues are acceptable for cutover. Not every issue gets resolved before exit. The operating partner decides which are blocking and which are acceptable to handle post cutover. The go no go criteria define the conditions under which the cutover actually happens on the planned date versus slips to a contingency date.

The criteria typically include parallel running results within tolerance, all critical defects resolved, support readiness confirmed, rollback path documented, seller signoff received on key handover items. Each criterion gets a green, yellow, red status thirty days before exit, fourteen days before exit, and seven days before exit.

A go decision requires all criteria green or yellow with the operating partner's explicit risk acceptance on the yellows. A no go decision triggers the contingency plan, usually a one to three month extension at known cost. The work pairs with TSA exit application cutover planning.

Phase four: cutover execution. Decisions in real time.

Phase four is the cutover itself, usually a weekend or a defined exit window. The Newco team executes the cutover plan. The buyer-side advisor stands beside the team. The seller's exit team participates per the documented handover. The operating partner is on call for the duration of the cutover and on site for the highest risk deals.

The operating partner makes the calls that emerge during cutover. Whether to invoke a rollback on a workstream that hits an unexpected issue. Whether to accept residual risk on items that did not test cleanly. Whether to extend the cutover window if execution runs long. These decisions happen quickly under pressure. The operating partner being engaged in earlier phases makes the calls easier.

The operating partner also manages the seller relationship during cutover. The cutover is often the moment when latent disputes surface. The seller realizes the buyer is leaving. Settlement items, true ups, residual fees, data handover, retained obligations all come up. The buyer-side advisor handles the detail but the operating partner sets the negotiating tone.

The cutover is over when every workstream has formally exited the TSA and the final seller invoice has been validated and either paid or disputed. The work pairs with TSA exit rollback planning.

After exit. The first thirty days are not over.

The operating partner stays close to the Newco for the thirty days after TSA exit. Issues that did not show up in parallel running often surface in production. The standalone capability handles new transaction patterns that the test scenarios did not cover. Edge cases break. The Newco team triages and fixes. The operating partner protects the Newco team from non essential demands during the stabilization window.

The buyer-side advisor stays engaged through the stabilization period. Most TSA contracts include a defined post exit support window with the seller, usually thirty to ninety days, during which the seller will assist on issues that arise. The buyer-side advisor manages the support window and tracks which issues are seller responsibility versus Newco responsibility.

The operating partner also closes out the value creation reporting on the TSA. The savings realized through TSA cost takeout, the exit cost actual versus budget, the application portfolio rationalization results, the vendor renegotiation outcomes. The final TSA scorecard becomes part of the value creation record on the deal.

The TSA exit is also the moment to debrief. What worked. What did not. What the operating partner would do differently on the next carve-out. The debrief feeds the playbook for the next deal. The work pairs with TSA exit knowledge transfer.

More for operating partners.

For the full exit sequence behind these plays, start with the TSA exit strategy pillar. For the management team view, see how the firm works with portfolio companies.