All Plays

Third-Party / Advisor Utilization and Management

Use this play to help define upfront the external resources needed to conclude the sale and separation of the target business.

Play by:

About the play

Sellers may not have the experience or the resources available to provide the management and advice necessary to conclude a sale successfully.  Therefore sellers should consider enlisting independent and experienced advisors to provide support before, during, and after the sale. 

This play helps define upfront the external resources needed to conclude the sale and separation of the target business.

Before running this play it’s recommended that an organizational readiness assessment is conducted first. This will help highlight the gaps current capabilities.


Preparation

People

Executive sponsor, separation manager and deal team

Difficulty

Medium

Materials

Meeting Agenda, Whiteboard, Strategy documents, & Resource Plan

Time

Spend one day or more to prepare materials for a two hour play.

Running the Play:

01

Create a Resource Plan

Resources are people, equipment, place, money, or anything else that’s needed to run the deal. Resource requirements are dependent on organizational readiness, divestment approach, governance and the sale process that will be followed.

The resource plan should reflect the key phases, streams of work and anticipated timeline for the transaction.


02

Assign Resources

Working with the executive sponsor for the divestment, the separation manager should begin to assign internal resources taking note of their availability, their level of participation (from 10% to full-time) and skills level. Take into account holidays, long service leave, and most importantly, the ‘Business as Usual’ (BAU) activities that must be performed. BAU activities can easily take from 20-80% of a person’s availability. So it’s important not to overstretch staff as this can be counterproductive.

03

Highlight Resource Gaps

This process should highlight gaps in skills, resource availability and capabilities. Unless the seller is a serial acquirer, there is a strong likelihood that specialist and advisory support will be required, particularly in corporate advisory, legal and accounting. Moreover, external specialists have deep subject matter expertise and years of experience organisations will find hard to replicate. 

These gaps should be identified, budgeted and, where possible, booked in advance.

For example, consider the following services: 

Corporate Advisory (Investment Banker)
  • Provide a valuation estimate and advise on the spectrum of possible outcomes
  • Identify challenges early in the sales cycle
  • Develop the selling story and marketing strategy
  • Approach potential buyers and shop around for interested parties. 
  • Assist owners with valuation and negotiation strategy

Note that these specialists may also be referred to as Investment Bankers.

Legal
  • Assist with negotiation of transaction terms
  • Draft legal documents for the transaction
  • Focus on those aspects that might create exposure for the seller post-transaction
  • Assist with regulatory approvals.
  • Assist with deal close
Accounting
  • Conduct vendor financial due diligence
  • Prepare funds flow statements
  • Conduct closing date balance sheet or working capital analyses
  • Assist in identifying purchase price adjustments.
Tax
  • Provide advice on the structure of the sale
  • Determine the preferred domicile and type of legal/tax entity
  • Advise on the desired tax treatment for the transaction. 
Human Resource Management
  • Develop the organisation’s talent strategy
  • Organisational design
  • Terms and conditions for retention of senior executives
  • Employee contracts and compensation packages
  • Communications planning
Divestiture Management
  • Divestiture roadmap and planning
  • Governance and Separation Management Office
  • Transitional Service development
  • Day 1 Preparation
  • Carveout and transition management

Although less common, outside specialists may also be required in the following areas:

  • Procurement 
  • Payroll 
  • Asset valuation 
  • Remuneration 
  • Office relocation 

Additional IT support may be needed in the following areas:

  • ERP transition (for example SAP)
  • Network support
  • Desktop support
  • Telephony
  • Cloud and data centre specialists


 Potential Advisor services across the sale cycle.

 Potential Advisor Services

Confirm the gaps and resources required.


04

Allocate External Specialists and Update Resource Plan

Having a resource plan is critical to optimizing people, materials, and budget efficiency. It allows a better understanding of future resource requirements and where possible constraints, unforeseen costs, and potential risks may arise.


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