Multi-TSA Portfolio
Make TSA execution a value creation lever on every deal. Portfolio retainer.
Fixed-fee proposal in 48 hours. Senior team on day one. The first conversation is always free.
Operating partner value creation TSA work treats the transition services agreement as a deliberate phase of the value creation plan, not a residual chore. The frame is set inside the operating partner playbook and reinforced in every monthly review. Operating partners who treat the TSA as cleanup tend to overspend, exit late, and miss the cost takeout opportunities that the carve-out period opens up. Operating partners who treat the TSA as value creation move faster, capture more savings, and exit on time.
Most carve-outs frame the TSA as something to get through. The deal team negotiated it under time pressure. The operating partner inherits it at close. The Newco CEO treats it as overhead. The board treats it as a footnote. The frame produces predictable results: overspending, late exit, and a value creation plan that starts cold after the TSA expires.
The alternative frame treats the TSA as a deliberate phase of the value creation plan. The carve-out period is when the operating model gets rebuilt from the inside. Vendors get renegotiated. Headcount gets right sized. Application portfolio gets rationalized. Real estate gets exited. Banking gets consolidated. The TSA is the protective cover under which these moves happen.
The frame gets set in the first investment committee meeting after close. The operating partner brings a one page TSA value creation plan that names six to eight specific moves, the savings target for each, and the timing relative to TSA exit. The investment committee approves the plan and the resourcing. The frame is now an organizational commitment, not a personal preference.
The work pairs with operating partner TSA board reporting, which keeps the value creation framing visible through the rest of the TSA period.
The TSA itself is the first value creation lever. A buyer-side review of the service catalog, pricing model, and invoicing routinely finds savings of fifteen to thirty percent on the original TSA cost. Some of the savings come from descoping services Newco does not actually need. Some come from challenging cost-plus calculations and mark-up assumptions. Some come from invoice validation and overcharge identification.
The cost takeout work is bounded in time. Most of the savings are realized in the first ninety days post close. After that, the service catalog has been right sized, the pricing disputes are settled, and the invoicing process is clean. The operating partner gets a one time cost reduction and an ongoing run rate improvement.
The cost takeout is not a fight with the seller. The seller is usually willing to descope services that the buyer no longer wants. The seller is usually willing to clean up invoicing errors. The cost takeout is friction free when the buyer presents the analysis credibly. The friction only shows up if the buyer asks for retrospective credit on past invoices.
The work pairs with operating partner TSA cost takeout, which walks through the specific moves.
The second value creation lever is vendor renegotiation. The seller's vendor contracts were priced for the seller's enterprise volume. The Newco volume is smaller, but the Newco is often free to renegotiate the contract on its own terms once the TSA period ends. The TSA period is when the buyer scopes which vendors to renegotiate, which to consolidate, and which to replace.
The renegotiation work usually targets the top fifteen to twenty vendor contracts by spend. Cloud infrastructure, enterprise software, telecommunications, professional services. Some of these the Newco can negotiate directly during the TSA. Some require the TSA exit before the Newco can shift providers. The operating partner sets the timing based on TSA exit dates and contract renewal cycles.
The renegotiation work is not free. It takes a procurement leader, often a category specialist, sometimes a sourcing advisor. The operating partner authorizes the spend in the value creation plan, knowing the payback period is usually under twelve months on most vendor categories. The pre-TSA exit work also gives the Newco team practice in running negotiations as a smaller buyer.
The work pairs with operating partner TSA vendor management, which covers the broader vendor strategy.
The third value creation lever is organization design. The Newco at Day One usually inherits a head count structure that reflects the seller's enterprise scale. Many functions are over staffed for the Newco standalone footprint. Some functions are missing entirely because the seller provided them centrally. The TSA period is when the operating partner rebuilds the organization to fit the Newco scale.
The organization design work happens in three waves. Wave one is the immediate adjustments at Day One: pulling out the seller's enterprise overhead allocations, sizing the finance and HR teams to Newco scale, eliminating obvious duplication. Wave two is mid-TSA: rebuilding the operating model with the right number of layers and the right span of control. Wave three is exit period: standing up the standalone capability for whatever the seller was providing under the TSA.
The savings from organization design are larger than the TSA cost takeout but slower to realize. A right sized Newco typically takes twelve to eighteen months to fully construct. The savings show up in the operating model in years two and three. The operating partner sequences the work to avoid disrupting TSA execution while still moving fast enough to capture the value.
The work pairs with operating partner TSA talent strategy, which covers retention and hiring during the carve-out.
The fourth value creation lever is application portfolio rationalization. The Newco inherits a stack of business applications that was scaled for the seller's enterprise. Many of these applications are over licensed, over engineered, or simply unnecessary at Newco scale. The TSA exit is the natural moment to redesign the application portfolio rather than carry the seller's stack forward.
The rationalization work starts with an application inventory. Every TSA service that depends on a business application gets mapped. Each application gets a decision: lift and shift to Newco infrastructure, replace with a lighter alternative, retire entirely. The decision criteria include license cost, integration effort, data migration complexity, and process impact.
The savings from rationalization are recurring. A Newco that exits the TSA with thirty fewer applications, mid market licensing instead of enterprise licensing, and modern integration patterns will run materially cheaper than a Newco that lifts and shifts the seller's stack unchanged. The operating partner authorizes the rationalization plan as part of the TSA exit program.
The work pairs with carve-out application portfolio rationalization for the technical detail.
The fifth lever is time to TSA exit. Every month the TSA runs costs the Newco the TSA fee plus the indirect cost of constrained operations. A TSA that exits on month twelve instead of month eighteen captures six months of operational independence, six months of accelerated value creation work, and six months of avoided TSA cost. The compounding effect is large.
The operating partner drives exit speed through three mechanisms. The exit acceleration program, which gets the workstreams running in parallel rather than sequentially. The seller dependency tracking, which catches slippage early. The buyer-side advisor pressure on the seller's exit milestones. Operating partners who push for exit speed routinely shave three to six months off the original TSA period.
The sixth lever is optionality. A Newco that exits the TSA cleanly is a more saleable asset. A buyer of the Newco in year three or four prefers a standalone operating model with no residual dependencies on the original seller. The operating partner who runs the TSA program for optionality preserves exit value for the next sale.
Optionality also matters for refinancing and capital structure events. Lenders prefer a clean Newco with no TSA risk. The TSA program contributes to optionality by treating the exit as a milestone, not a deferral. The work pairs with operating partner TSA exit planning.
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.
The pre-signing, Day One, mid-TSA, and exit checkpoints a PE operating partner runs on every portfolio carve-out.
Read the article →The monthly, quarterly, and annual cadence for monitoring TSAs across a PE portfolio.
Read the article →Board reporting on TSA execution that protects the value creation framing across the life of the deal.
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 $150M-revenue platform carve-out runs a Transition Services Agreement across nine functions. For a PE owner the exit is not an IT chore — it is a value-creation workstream with an EBITDA number on it. The moves below cut the exit from a 16-month drift to a 9-month managed exit, remove $4.4M of mark-up and stranded cost, and lift recurring EBITDA enough to move enterprise value at exit multiple.
One tactic, one benchmark, or one pattern from a recent buyer-side engagement. Short. Signal heavy. Free.
Subscribe to The Day One Letter →