How Private Equity Carves a Business Out of a Company

Key takeaways

• ParkerGale deployed machine models to extract assignment rights, change of control terms, and annual contract values across every customer contract in a corporate carve-out. Read more →
• Corporate carve-out leaders sit between two masters: fiduciary duties to the seller and incoming employment with the private equity buyer. Read more →
• Kevin Gorman and Ryan Milligan at ParkerGale identify a pricing inversion between due diligence and deal closing: buyers claim standalone operating costs will be severe to push down enterprise value, then turn around and demand minimal transition service fees from the parent. Read more →
• In corporate carve-outs, sellers present contribution margin packages that exclude corporate overhead, leaving buyers acquiring what Kevin Gorman terms "something less than a fully operating company from a larger parent." Read more →
• Carve-outs force buyers into zero-based budgeting because corporate sellers rarely transfer existing vendor contracts intact, requiring each operational expense to be justified from scratch. Read more →