Picking Up the Pieces: The Corporate Carve-Out Opportunity
In an article for Middle Market Growth, White & Case partner Germaine Gurr examines corporate carve-outs and the two-step approach that a parent organization should take when it considers selling a business unit or other asset.
Gurr notes, “The initial step is identifying the assets that the company is looking to divest, and then specifically identifying where those assets are located. You need to figure out how they are connected to the business that is going to be left behind and what is the most efficient way, for tax and other reasons, to remove it as a separate business that can be sold.”
“Once a deal is underway there will be overlapping considerations across accounting, IT, tax, finance and legal that can add complexity. It’s critical that sellers understand and communicate these issues and how they intersect to give the buyer a full picture of what it’s purchasing.”
She adds, “Coming across as really understanding the business you are carving out and addressing any interconnected issues will be key to giving the buyer the comfort that this business, that was part of a larger entity, can function on a standalone basis, either shortly after the acquisition or immediately after it, and there are no additional costs they are going to have to foot to make it a standalone business.”
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