baby-feet-first-steps

The seller and buyer should start talking about the Transition Service Agreement (TSA) early in the deal process. Ideally, the seller and buyer would involve a wide variety of people in early deal discussions. However, this is often not possible due to the need for confidentiality. The objective should be to involve the right people without impeding sale negotiations.

The seller should identify systems and services that are critical to the business after the buyer takes over. These might include:
• Human resource systems
• Claims/payment processing systems
• Web sites/e-commerce infrastructure
• Production/manufacturing control
• Databases
• Interfaces for interactions with third parties
• IT facilities and resources
• Service agreements (outsourcing services, landline/mobile telecom and personal digital assistants (PDAs))
• License agreements

FOR EACH ITEM IDENTIFIED, THE SELLER SHOULD ALSO CONSIDER KEY ISSUES:
• What technology platforms are used?
• Was the system or service developed internally by the seller?
• Is the system or service “dedicated” or “shared”?
• Is it feasible to assign to the buyer any third-party agreements used to support the business, and/or whether consents are required to provide services under the TSA to the buyer?
• Are there commingled data or records that will be impractical for the seller to segregate such as email or historical or archived data?

EARLY ANALYSIS
The seller also should determine if any of these items will no longer be required after the deal closes. Doing this analysis early may help the seller get a better handle on IT-related transaction costs for the deal.