Reverse TSA Advisory
Price the back office continuity before the seller assumes it is included. Specialist work.
Fixed-fee proposal in 48 hours. Senior team on day one. The first conversation is always free.
Reverse TSA finance back office services arise when the buyer keeps a working ERP, an accounting team, and a close calendar that the seller still relies on after Day One. The buyer ends up processing the seller's invoices, running the seller's payroll, closing the seller's books, and filing the seller's reports while the seller stands up its own finance organization. The work sits inside the broader reverse TSA advisory practice and is one of the most mispriced reverse services in the market because finance scope expands quietly.
Reverse finance scope emerges when the buyer acquires a unit whose ERP, shared services center, or finance team also processed transactions for the seller's other businesses. The general ledger, the AP workflow, the AR aging file, the close calendar, the management reporting cube. All of it sat inside the acquired perimeter. The seller cannot extract the seller's transactions without a parallel finance build.
In the meantime, the seller still needs payroll to run, invoices to clear, customers to be billed, and books to close. The seller has two options. Stand up a new finance organization fast, which takes 9 to 18 months. Or pay the buyer to continue running finance services through a reverse TSA. Most sellers choose the second path because the first one is operationally implausible at Day One.
The buyer side advisor scopes these services with three priorities. Protect Newco's own close. Recover full cost plus a defensible mark-up. Set exit milestones that match the seller's realistic stand-up timeline. The third one is the place most buyers concede ground because finance stand-up always takes longer than the seller predicts at signing.
Without a careful catalog, the buyer ends up subsidizing the seller's finance organization through processing capacity Newco needs for its own value creation work. The buyer side advisor blocks this by pricing every line and binding every exit milestone before signature. The work pairs with the reverse TSA primer.
Reverse finance scope falls into six process areas. Accounts payable. The buyer's AP team processes the seller's invoices, manages vendor master, and runs the payment cycle. Accounts receivable. The buyer's AR team invoices the seller's customers, applies cash, and works the aging file. Payroll. The buyer's payroll team runs the seller's pay cycles, manages tax filings, and handles garnishments. General ledger and close. The buyer's accounting team books the seller's transactions, runs the month-end close, and reconciles balance sheet accounts. Management reporting. The buyer's FP&A team produces the seller's monthly management pack and KPI dashboards. Tax and statutory. The buyer's tax team prepares the seller's filings and supports statutory audits.
Each area has a different risk profile. AP and payroll are operationally critical (one missed payroll becomes a labor incident). Close and reporting have hard external deadlines (regulatory filings, debt covenants, audit milestones). Tax has the longest tail and the highest dispute potential. The catalog needs to price each area separately because the operational burden, the staffing model, and the exit timeline differ.
The catalog should also distinguish processing volume from process complexity. Two AP teams with the same invoice count can have wildly different effort profiles depending on how many entities, currencies, and approval workflows are involved. The buyer side advisor builds the catalog on activity metrics that reflect the real work, not on simple invoice counts.
The buyer should reserve the right to refuse process changes during the reverse TSA. The seller may want new vendor onboarding workflows, new approval thresholds, new reporting formats. The catalog locks the scope as it ran at Day One. Changes are explicit add-on requests at additional cost. The work pairs with reverse TSA service catalog design.
Finance reverse TSA pricing combines cost-plus economics with per transaction or per cycle floors. The cost base captures direct headcount, the seller's allocated share of the ERP and supporting tooling, and a defensible overhead allocation. The mark-up rests on top. Market mark-up for finance services typically runs 8 to 18 percent depending on complexity and specialist content.
Per transaction floors protect the buyer when volume drops below the threshold required to keep dedicated capacity running. A finance team configured to process 5,000 invoices per month does not get cheaper at 3,000 invoices per month because the capacity is fixed. The floor prevents the seller from gradually reducing volume to force the buyer to carry stranded capacity at minimal revenue.
Pass-through pricing applies to third-party services that the buyer engages on the seller's behalf. Tax filing fees. Statutory audit fees. Payroll processor fees if the buyer outsources part of the payroll cycle. Pass-through is the cleanest treatment because the buyer charges actual cost without mark-up. The buyer side advisor adds audit rights so the seller can verify the pass-through invoices match the underlying third-party cost.
Currency and intercompany pricing need explicit treatment. Where the buyer's ERP runs in one functional currency and the seller operates in another, the catalog should specify which party absorbs FX variance. The default position protects the buyer (FX moves get billed through). Sellers will negotiate. The buyer holds where the seller has more FX exposure than the buyer. The work pairs with reverse TSA pricing models.
The reverse finance arrangement has to protect Newco's own close calendar. Newco's monthly close is non negotiable for the operating partner, the lenders, and the board. The seller's close runs second. The catalog should explicitly sequence Newco's close before the seller's close and bind the buyer to operational priority for Newco workloads.
Close coordination is the highest dispute risk in a reverse finance TSA. Both entities want clean cutoffs. Both entities want timely intercompany reconciliations. Both entities want auditor sign off on the same files. The catalog should specify a joint close protocol where the responsible parties at the buyer and seller commit to deliverables on specific dates each cycle.
The buyer side advisor sets close service levels conservatively. Cycle days targets should match historical performance, not the seller's wish list. Reporting deadlines should align with the seller's external commitments only where the buyer has run those deadlines previously and can sustain them at the seller's reduced share of the buyer's overall workload.
Statutory and audit support need particular care. Buyer finance staff supporting seller audits incur real time commitments and create awkward conflicts where the same population serves Newco audits. The catalog should price audit support separately and cap the hours per cycle so audit overruns do not silently absorb buyer capacity. The work pairs with TSA audit coordination.
Reverse finance scope sits on the buyer's general ledger. The seller's transactions get booked in the buyer's ERP, often inside the same legal entity structure that used to host them. The catalog needs to spell out how the buyer segregates seller data from Newco data, who has access, and how the audit trail demonstrates the boundary if a question arises.
Best practice uses dedicated entities or business units in the buyer's ERP so that all seller transactions roll up cleanly. Where this is not possible, the catalog should require dimensional tagging on every seller transaction so reports can be sliced by ownership. The buyer side advisor verifies the tagging works during pre signing because untagged transactions create reconciliation nightmares at exit.
Access controls should be explicit. The buyer's finance team supporting the seller's processes should have role based access limited to the seller's data. Newco finance staff should not see seller data unless explicitly authorized. The catalog should require quarterly access reviews and document the segregation logic that protects both parties.
The exit transition is where audit trail discipline pays off. When the seller is ready to migrate to its own ERP, the buyer needs to extract the seller's historical ledger, sub ledgers, and supporting documentation. Clean tagging makes this straightforward. Sloppy tagging turns the exit into a reconstruction project that delays the seller's stand-up and frustrates both parties. The work pairs with the data migration strategy.
Finance back office services have the longest tail in most reverse TSAs because the seller's finance stand-up depends on selecting, implementing, and stabilizing a new ERP. The realistic timeline for a finance stand-up of any meaningful size is 12 to 24 months. The catalog should bind exit milestones to that reality and price extension fees accordingly.
The catalog should also unbundle the process areas. Payroll typically exits first because payroll outsourcing is fast to procure. AP and AR exit in the middle window because process migration is routine once a new ERP is in place. General ledger, close, and reporting exit last because they depend on the seller's full ERP cutover. Each line should have its own milestone date, not a single program level date.
The buyer should require the seller to share its finance stand-up plan during the reverse TSA period. Quarterly updates on system selection, implementation milestones, and parallel running plans. The transparency lets the buyer plan its own resource ramp down and surface slippage early. The catalog should make the reporting a contractual obligation, not a courtesy.
Reverse finance back office work is delivered under a Fixed Fee or Portfolio Retainer engagement. The Fixed Fee engagement covers a single reverse TSA scoped during diligence. The Portfolio Retainer covers PE platforms with multiple portfolio companies running reverse finance services. The buyer side advisor scopes the work, drafts the catalog, prices the lines, and delivers a fixed-fee proposal within 48 hours of intake. The work pairs with reverse TSA exit strategy.
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