Assessing the buyer`s requirements. The buyer`s main task at the beginning of the transaction is to evaluate the seller`s responses to the requests described above (through an initial meeting with the seller and due diligence questionnaires) so that the buyer has a better sense of the systems and services used to carry out the target transaction. The buyer should use this information to identify potential overlaps and gaps in their own capabilities and systems. In the event of overlap, the buyer must determine which overlapping item should be retained after the closure. In the event of deficiencies, the buyer should identify how to deal with insufficient or missing systems or services. For example, the buyer`s current systems and services, TSA services or newly purchased systems or services. In addition, the buyer should think about how the systems and services of the target company and the seller connect to its own technology sourcing model. Incompatibilities with the buyer`s current systems should be identified and analysed at an early stage in order to identify other agreements. The buyer should also evaluate the call options for the target transaction when the TSA ends. Often, the seller must rely on his own suppliers and service providers to provide services to the company after closing. Determine whether the seller has sufficient rights under its existing upstream contracts and licenses to provide the requested services on its own, or whether third-party agreements and licenses need to be entered into or modified with vendors and service providers. Consider the criticality and complexity of the services requested, as well as the cost and timing of the conclusion or modification of third-party agreements (given the possibility of third parties having reasonable leverage and little incentive to provide short or transitional services). A global healthcare services company, active in the biopharmaceutical and medical device sectors, has begun the integration of a global division.
Integration efforts have spread to more than 70 countries, with different operating structures and the use of several computer systems. The challenge for the company was to ensure a rapid exit from the regional TSA in all regions, while maintaining the continuity of global business. A diversified industrial company has divested operations in its portfolio. Companies tended to be highly centralized and used a shared service center for back-office, IT, HR and purchasing. Business activity has also brought distribution and manufacturing to market. KPMG was hired to help the client detect links and develop a day 1 operating model for „a typical asset in the portfolio.“ This first exercise provided the model for determining what would be expected of a buyer and what the seller would be willing to provide, and specific data elements were collected to help the customer set prices and service levels. For example, back-office processes have been used to collect KPIs and to establish estimates of the FTEs needed to support processes. The high-level performance calibration allowed the client to determine how long it would take for a buyer to replace services (i.e. outsourcing) and how long the customer would have to reduce lost costs. Volume, duration and SLAs were recorded in service plans that the client used as a starting point for his assignment work. Working with functional teams, the company determined which services it would not provide and which services would be a challenge.
The entanglement led to potential actions that the client was willing to take in advance of future restructurings and divestitures. At the end of the year, the client team worked with members of the company`s development team to develop a common understanding of the trade-offs between the various TSA options.