TSA Pre-Signing Review
Send a TSA specialist to the management session. Specialist work.
Fixed-fee proposal in 48 hours. Senior team on day one. The first conversation is always free.
TSA management presentation questions are the specific items a buyer-side TSA specialist puts to the seller's operating leadership during diligence. The seller's deck almost never volunteers the answers. The questions exist because the answers move the cost model. The work runs inside the broader TSA due diligence practice and complements the financial QoE, the legal review, and the commercial diligence streams. A good management session generates two to three days of analytical follow up and surfaces the issues that drive redline.
The first domain is the service catalog. The buyer-side advisor wants the seller to walk through every service the TSA will cover at line item granularity. The seller's draft TSA typically lists service categories without line item detail. The buyer needs the line item detail to validate pricing and confirm scope.
Core questions for the catalog session: Which services are in the TSA today and which are excluded? For each Tier 1 service, who on the seller's side actually delivers it? What is the volume metric (users, transactions, tickets, square feet) and what was the volume baseline used to price? What changes if the volume goes up or down by twenty percent? Where are the dependencies on services that the TSA does not list but the carved-out business assumes will continue?
The catalog questions reveal the gaps. The seller's catalog often misses small but operationally critical services. Master data feeds. Vendor master administration. Specific report deliveries. Tax filing support. Network connectivity to a specific business partner. Each missing line item becomes either a redline addition or a Day One readiness gap that the buyer absorbs.
The catalog session usually runs two to three hours and is the longest of the management sessions. The buyer-side advisor brings the inventory work product from independent diligence and reconciles to the seller's catalog line by line. The work pairs with service catalog rationalization.
The second domain is pricing. The seller's draft TSA usually carries blended fees per workstream without showing the cost build. The buyer-side advisor needs the cost build so the cost-plus structure or the fixed-fee structure can be validated and challenged where it favors the seller.
Core questions for the pricing session: What is the cost build behind the TSA fee? What allocation method is the seller using to assign shared service cost? What mark-up percentage is the seller applying and what does the seller include in the cost base? How are pass-through charges defined and what evidence is the seller obligated to provide? How does pricing change if the buyer drops a service before the original end date?
Specific traps to surface. Allocation methods that mix variable and fixed cost in a way that protects the seller from volume reductions. Mark-up percentages above the industry norm of three to eight percent. Pass-through cost categories defined so broadly that the seller can include indirect expenses. Termination fee schedules that force the buyer to pay through the original term even if the service drops in month three.
The buyer-side advisor brings benchmark pricing data and the cost model template to the session. The seller's commercial lead either provides the cost build under NDA or accepts the buyer's request as a follow up data room item. Both paths are workable. Refusal to share any cost detail is itself a red flag. The work pairs with cost-plus versus fixed-fee pricing.
The third domain is exit. The seller's draft TSA typically focuses on the steady state during the TSA period. The buyer-side advisor focuses on what happens at exit. Exit terms drive whether the buyer pays extension fees, whether knowledge transfers, and whether the seller has any obligation to support the migration.
Core questions for the exit session: What is the seller's exit obligation? Does the seller commit to support the buyer's migration with knowledge transfer, data extracts, and technical assistance? What is the extension fee schedule if the buyer needs more time? Is there a mid-TSA extension trigger and what does it cost? How does the seller transfer custody of data, documentation, and operating know-how at exit?
The exit questions are where seller-drafted TSAs are weakest. The seller's draft usually contains a passive exit clause that the buyer must give notice and pay. The buyer-side advisor flags the gap and proposes active exit obligations. Documented knowledge transfer sessions. Data extract specifications and timelines. Specific seller resources committed to support migration. Extension fee caps and termination protection.
The exit session typically runs ninety minutes. The seller's deal team often pushes back hard because exit obligations have cost. The buyer-side advisor stays firm. Weak exit terms cost the buyer multiples of the redline savings during the actual exit. The work pairs with TSA exit knowledge transfer.
The fourth domain is governance. The TSA runs for twelve to thirty six months on average. Things change. New services get added. Volumes shift. Disputes arise. Governance determines whether change happens cleanly or through endless escalation.
Core questions for the governance session: What governance committee structure does the seller propose? Who has decision authority on the seller side and on the buyer side? What is the change control process for adding or removing services? How are disputes escalated and resolved? What is the monthly operating rhythm? What reports does the seller commit to deliver?
The buyer-side advisor presses for written decision rights, named individuals, and time bound escalation paths. Governance language that references "good faith discussion" or "mutual agreement" without time bounds always favors the seller because the seller controls the service and benefits from delay. Named decision owners with clear authority and forty eight hour or seventy two hour escalation windows close the gap.
The governance questions also surface the seller's true operating philosophy. Sellers who resist clear governance language usually intend to use ambiguity as leverage during the TSA. Sellers who welcome clear governance language usually intend to honor the spirit of the deal. The buyer-side advisor reads the room. The work pairs with TSA governance committee structure.
The fifth domain is vendors and dependencies. Most TSA services depend on third-party contracts that the seller holds. The buyer needs visibility into the underlying contracts because the seller's right to pass them through is not automatic and the pricing step up at exit is real.
Core questions for the vendor session: Which TSA services depend on third-party vendor contracts? Which contracts assign to Newco and which sit in the seller's name? Where does the seller plan to pass through vendor cost and how is the pass-through priced? Which contracts renew during the TSA period and what is the consent risk? What is the seller's plan if a critical vendor refuses to support the TSA arrangement?
Sellers often resist the vendor questions because vendor specifics expose pricing leverage. The buyer-side advisor is firm. Without vendor specifics, the pass-through clauses are uncontrollable and the standalone cost model is a guess. The seller can redact commercial sensitive elements but the contractual mechanics need to be visible.
The buyer-side advisor coordinates this session with the vendor diligence stream. The two work products feed each other. The work pairs with TSA vendor diligence.
The sixth domain is red flags. The buyer-side advisor finishes the management session with a focused set of questions designed to surface what the seller has not volunteered. These are the questions that catch the soft commitments, the planned cost shifts, and the deferred capital that often does not appear in the QoE.
Core red flag questions: Are there any TSA services where the seller currently operates below the SLA target it plans to commit to in the TSA? Are there any planned headcount reductions on the seller side that will affect TSA service delivery? Are there any pending vendor renewals where the seller already knows the cost will step up? Are there any regulatory or audit findings that the buyer should know about before signing? Is there any planned change in the seller's technology platform that will affect TSA service continuity?
The red flag questions usually generate visible discomfort. The buyer-side advisor watches for the deflection patterns. Vague answers. Reference to the seller's deal counsel. Promise of follow up that does not arrive. Each deflection becomes a follow up data room request and a redline trigger.
The buyer-side advisor closes the management session with a written summary of follow up items, owners, and deadlines. The summary goes to both the buyer's deal team and the seller's deal team. Documented follow up keeps momentum and prevents the seller from quietly burying inconvenient findings. The work pairs with TSA red flags in diligence.
The buyer-side checklist for catalog, pricing, governance, and exit before the term sheet hardens.
Read the article →Which contracts transfer, which need consent, and which step up at exit. Buyer-side method.
Read the article →The seller-drafted clauses that quietly transfer cost and risk to the buyer. What to flag and how to fix.
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.
On a representative $48M-revenue carve-out, the CIM models the TSA at $4.2M. Read in diligence — separation scope tested, draft TSA red flags caught, stranded cost sized — the true cost lands at $6.8M. That $2.6M gap is set before signing, and it is only visible to the buyer who reads the separation in diligence rather than discovering it in delivery.
One tactic, one benchmark, or one pattern from a recent buyer-side engagement. Short. Signal heavy. Free.
Subscribe to The Day One Letter →