Carve-outs In A Box
Over the past several years the private equity industry has seen significant growth, both in new funds launching & emerging private equity firms. As a result, the demand for carve out deals has exceeded supply. However, as more firms with more traditional investment tendencies seek more niche investments such as Carve-out opportunities, we have seen demand rise.
Carve-out transactions usually start with a large enterprise parent company that is selling a division, in its entity, to a private equity firm who will then run the business as an independent entity. Carve-outs can be very profitable if done correctly, but more often than not, organizations underestimate the complexity of the IT portion and the impact of making the wrong decisions early in the process. Cost-optimized, secure, high-performing IT is created during the transition, not “sometime” later during the hold period when the focus needs to be on value-creation.
Private Equity Carve-Out Experience
Working with a business partner with significant experience in M&As could mean the difference between successful, on-time TSA exit or missed, expensive TSA deadline fees. RKON has executed over 30 carve-out and M&A initiatives in the last two years alone. Working with private equity & mid-markets for the better part of a decade, RKON has the experience, scalability, and proven approaches necessary to minimize risks and maximize value in even the most complex transactions.
Proven Carve-Out Strategy and Methodology
RKON’s proven private equity carve-out methodology for carve-outs and M&As address many concerns that arise during the carve-out process, especially complex turnovers and varying stakeholder demands. After working with hundreds of businesses to seamlessly complete their transition, we have established a verified approach to ensure an efficient, stress-free migration from day one.
To unlock the complexity of your transition, here is our accurate and proven approach to help you measure and drive value within each and every transaction.
Effective Carve-Out Execution
Because mergers involve a multitude of intricate processes, the delivery team must be able to manage many moving parts. The creation of a stand-alone entity in a matter of weeks is daunting by itself, not to mention the added lack of cooperation from the legacy organization or the attrition of employees, which creates a chaotic, disparate work environment. RKON helps clients to determine the most favorable level of IT sourcing and to implement the most appropriate technology for the new business unit — all to promote flawless execution.
Common Carve Out Mistakes
Many carve outs fail because of inadequate IT planning and a lack of knowledge around infrastructure, costs & security. This results in Private Equity having higher than anticipated costs, underperforming assets, and an increase in risk. Many failed carve-outs encounter one of two things:
- Automatic Adoption of Parent Company’s IT Blueprint: Occurs when the newly formed entity adopts the IT infrastructure of the parent company to integrate into its enterprise systems. For a newly formed carve-out this blueprint impacts loss of cost reduction, increases asset overhead, and often limits ability to outsource & scale IT to business needs.
- Using a Traditional Advisory Playbook: This approach to carve-outs is more transitional as opposed to transformational. This is where the vendor focuses less on driving a project through completion using recommendations and solutions, and more on vendor selection & exit strategy.
Elite Carve-Out Team
Constructing a team for diligence, planning, and design that can also focus on short-term, intense analysis and convert abstract, detailed processes into a meaningful strategy is key to accomplish a successful transition. Not to mention, consultants should be profiled to know who’s best suited to handle the stress and pressure of these projects, as well as which creative thinkers can overcome unforeseen obstacles and avoid all distractions for an efficient TSA exit.
As a leading IT transformation advisory practice, our team has deep consulting and execution expertise in carve-outs, M&A, platform creation, and operations management. Our industry experience is rooted in our passion, integrity, and commitment to finding the best-possible IT solutions for our clients. Contact us and learn more about our IT carve-out services.
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If you are looking for more information about our IT Transformation & Security services please don’t hesitate to reach out. Our team of IT experts is ready to help.