Our services and team of carve-out specialists are geared to making sure our clients’ separation processes are as smooth and value-enhancing as possible. We understand the practicalities, challenges and potential risks of both the technical preparation of carved-out financial statements as well as the operational implementation.
Despite carve-out transactions by their nature being more complex to implement, this type of transactions is a growing feature in the current deal market.
Our experience has taught us that a successful carve-out depends on the following critical matters:
A key component of any divestiture is the preparation of the financial information of the carved-out business. Deal basis financial statements should reflect the business operations being divested, which may be different than the historical reported operations of the carve-out entity. These statements should reflect the historical operations of the carve-out business and all related costs of doing business as if the carve-out business has always operated on a stand-alone basis.
The preparation of carve-out financial statements is one of the most complex issues in the execution of a divestiture as there is limited guidance covering their composition, in particular when it comes to the treatment of shared, assets, shared resources, required stand-alone adjustments and the resultant impact on the remaining business.
As a result, the preparation of carve-out financial statements requires special attention to ensure that all of the assets and liabilities of the separate business have been properly identified, and that all relevant costs of doing business have been reflected in the carve-out financial statements.
Understanding the ins and outs of divestitures, and the potential impact to both buyers and sellers, will pave the road to a successful transaction and the realization of deal value.
Using our extensive deal experience supported by our Technical Accounting and Tax subject matter experts, we will guide you through the intricacies of preparing carve-out financial statements.
The interconnectedness of businesses, products and enabling functions within a company create challenges when attempting to separate a business being carved-out while moving at the pace of deal making.
How do you disentangle the underlying infrastructure, intellectual property, and shared commercial arrangements? How do you separate shared fixed assets, resources and contracts? How will the carve-out business operate as a standalone business? How do you reorganise your remaining business? How do you engage key stakeholders?
We understand both vendor and buyer perspectives and their impact on the value of the deal.
If you’re a vendor, we can help you to assess the costs of the carved-out business and the transitional support required, also the implications thereof on the expected returns from the deal. We can also help you to anticipate bidder requirements, which can accelerate the deal process and maximise the proceeds. We ensure separation plans can be delivered, that business disruption is minimised and that there is an appropriate and executable level of support during the transition.
If you’re an acquirer, we can help evaluate and challenge the cost base and effectiveness of the transition plans and improve operational efficiency, both during the transition and as a standalone business. We will work alongside you to implement these plans effectively.
Our flexible and rigorous carve-out approach focuses on what really matters: