Chicago, IL, Jan 19th — Companies that are about to undergo a merger or separation will need to understand what an IT carve-out is and how the procedure starts.
When a business unit is highly integrated, it can be challenging for the company to keep it solvent while selling it off completely. That’s when a business needs an IT carve-out.
The most frequently asked questions when starting an IT carve-out project have been compiled by Fission Consulting, experts in complex IT transformations.
According to the company, “an IT carve-out refers to the activities needed to identify and separate NewCo’s IT assets from Parent’s IT environment. To operate as an independent company, NewCo will need to establish its own IT environment to support the business after separation.”
If a company still owns equity in the subsidiary, a carve-out enables it to profit from a business sector that may not be a part of its core operations. A carve-out is comparable to a spin-off, but in a spin-off, existing shareholders receive shares from the parent company rather than acquiring new ones.
In Fission’s latest FAQ guide, it helps clients succeed with their most significant IT transitions and transformations, and provides its clients with the necessary knowledge about IT carve-outs to ensure they do not lose.
Fission defines IT carve-outs as identifying and separating NewCo’s IT assets from its Parent’s.
NewCo will need its own IT environment to function independently after separation. To operate NewCo’s business effectively, Parent’s critical systems are transferred into the company’s IT infrastructure.
To avoid disrupting business operations, IT carve-outs differ from typical system implementations.
For an IT carve-out, Fission suggests creating a project team with Parent, NewCo, and outside resources (where applicable).
Fission believes that the success of the IT carve-out signals success for the parent company. As a result of the TSA, NewCo will no longer rely on Parent’s IT infrastructure or its employees for support. All Parent data will be removed from NewCo’s environment on the first day of separation, and each company will behave differently.
With this advice, its clients can understand the importance of IT carve-outs, as well as the process and key points that will be of value to their business.
The company urges companies who are separating a business unit from their current organization to understand the importance of the IT carve-out and know it.
Interested parties can learn more about the IT carve-out in Fission’s latest FAQ guide at https://www.fissionconsulting.com/.