Mid-TSA renegotiation: large-cap PE software portfolio company

The Challenge

What the buyer walked into.

At month 14 of a 24-month, $9M annual TSA, a large-cap PE sponsor found the cost-plus mark-up had drifted above the original deal model. Services were being consumed that the portfolio company no longer needed, and the exit ramp in the original agreement was vague enough that the seller had little incentive to support a fast exit.

The Approach

How the firm ran it.

The firm ran an eight-week renegotiation. We rebuilt the consumed-service catalog against what the business actually used, identified families to retire immediately, and reset the mark-up to the original deal model. We rewrote the exit ramp with hard milestone dates and credits for missed seller obligations, then ran the negotiation through the governance committee.

The Outcome

Where it landed.

The run rate was reduced and brought back into the value-creation plan for the remaining 10 months, with a rewritten exit ramp that gave the buyer a credible path off the TSA. The renegotiation paid for itself well inside the remaining term.