The following comments and questions better represent “things to ask yourself”, not “this is what you need to do to have successful ASD” – apart from the fact that all participants should be communicated and that the agreement should of course be very well detailed. TSA versus outsourcing agreementsSowohl TSA and subcontracting typically involve one party providing the other with services that may be essential to the operation of the licensee`s business. However, one of the main differences with regard to ASAs is that the seller (as a service provider) is generally not in the sector of providing these services. In addition, the seller`s IT organization may lack discipline and business processes. When a company decides to follow an acquisition or divestiture, there are many issues to consider. Too often, the parties neglect, until late in the process, whether services are to be provided after a Transitional Services Agreement (TSA) has been concluded. This article describes the general context in which SAs are needed and gives tips for starting to collect and analyze ASD requirements to avoid unnecessary transaction costs, delays, and inefficiencies. Transient service agreements can be extremely difficult to manage if they are not properly defined. As a rule, poorly formulated SADs give rise to disputes between buyer and seller, focusing on the extent of the services to be provided. Given the time and resources often required to complete an ASD, the parties should determine at an early stage whether an ASD is warranted. Not all agreements require TSA: the provision relates to the networking of the vendor and the target business, as well as the specific capabilities of each party.
For example, will the divestiture lead the buyer to acquire all the assets (systems, service contracts, licenses, etc.) necessary to operate the targeted business (i.e.: The “clean break” scenario? If so, is the buyer confident that he will be able to manage the divested business without the seller`s help? Will the seller also be able to operate its retained activities without the assets or assistance of the divested business? If the answer to these questions is “yes,” asD may not be necessary.. . . .