The Vendor Trap That Derails Corporate Carve-Outs
Danielle Fortier, partner at Cooley, discusses why corporate carve-outs are surging amidst valuation gaps and breaks down the operational entanglements that frequently derail these transactions. She highlights the risks of underpriced vendor contracts, explains how to structure transition service agreements (TSAs) at the LOI stage, and outlines Cooley's framework for conducting pre-closing gap diligence. Fortier also analyzes how artificial intelligence has shifted intellectual property priorities, making source code separation easier in modern software deals.
- Corporate carve-outs are accelerating as valuation disconnects freeze broad platform sales, prompting corporate parents to shed non-core divisions to free up capital. Read →
- Danielle Fortier, partner at Cooley, observes that generative AI has removed historical resistance to copying and sharing proprietary codebases in corporate carve-outs. Read →
- Letter of intent terms that specify a transition service agreement without setting exact duration routinely produce clashes, with sellers anticipating a 3-month exit while carve-out buyers require 18 months. Read →
- Buyers obsess over customer contracts and top-line recurring revenue while routinely ignoring the shared back-office software that powers the carve-out target. Read →