10+ hours of podcasts, in 5 minutes.
5 quotes from 1 episode on M&A Science, each with a timestamped link to the source.
Danielle Fortier states that due diligence during a carve-out requires untangling shared back-office software and vendor agreements. Cloud hosting accounts often cover multiple business units under one master agreement and require separate transition plans to divide.
Technology transactions hide complex networks of underlying vendor dependencies that buyers often overlook during due diligence.
“What's sometimes less obvious, particularly in tech deals, is all of the vendor relationships that make that work…”
Single master accounts for enterprise infrastructure like cloud hosting cover multiple business units. Danielle Fortier notes that buyers cannot simply take over these broad agreements to operate a targeted entity.
“…on the vendor side, you just have your cloud hosting account for example, and that covers all of your businesses. And so, there's work to do there in order to pull it apart.”
“…it's often, particularly on the vendor side, not possible to just say like, well, here have all the vendor contracts that fuel this business.”
Assessing operational entanglements between a parent company and a division reveals missing infrastructure. Buyers fill these gaps by securing independent contracts or transition service agreements before a transaction closes.
“Usually the first step is drilling down on where are the entanglements in this business and where are there places where you as the buyer are going to have to fill a gap either through TSA, through getting your own contract, etc.”
From Carve-Out Diligence: Fortier on TSAs, Gaps, and Vendor Traps
“There are many types of vendor relationships that are not mission critical…”
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