Stout helped a client separate and spin off one of its largest business units by developing the separation plan and Transition Services Agreements (TSAs) and managing the operational, financial, and legal coordination required to establish two standalone businesses.

Our client was preparing to separate and spin off one of its largest business units. We were engaged to lead the separation analysis and the initial buildout of the TSAs.

The engagement was complicated by how deeply the two units were intertwined. They shared a single enterprise resource planning system, common back-office functions, and one computer network, so nearly every operational dependency had to be identified and untangled before either business could stand on its own. Because many of these dependencies had developed over time without formal documentation, we first worked to map the shared services, systems, personnel, and processes that would need to be addressed as part of the separation. This helped management distinguish between activities that could be separated immediately and those that would require temporary support under a TSA.

We worked directly with management to allocate employees between the two units, weighing each unit’s staffing needs against its financial capacity to absorb those roles. This required evaluating both the operational importance of individual roles and the cost implications of assigning them to either business, particularly where employees supported both organizations. We then built out the TSA framework and the formal TSA contract, meeting with leadership from both units to define what each would require from the other and calculating the hourly service rates and monthly payments owed between the businesses. The TSA structure documented the specific services to be provided, the expected duration of support, the responsible parties, and the financial terms associated with each arrangement, giving both businesses a defined operating model for the transition period.

In parallel, we served as the project management office for the entire separation, managing communication with prospective lenders, responding to diligence requests, and coordinating with the client’s attorneys and accountants. We also helped sequence key separation activities, track open decisions and dependencies, and keep management aligned across workstreams as legal, financial, and operational requirements progressed at different speeds. This centralized coordination was particularly important because decisions in one area, such as staffing or systems access, often affected multiple other parts of the separation.

To date, the client has completed its legal separation and now operates as two independent, standalone businesses. The resulting TSA framework and separation plan provided both organizations with clear responsibilities, defined economics, and a structured path to reduce their remaining dependencies over time.

The breadth and the degree of integration involved set this engagement apart. Unwinding two businesses built on shared systems and staff required cross-disciplinary work spanning operations, finance, human resources, and legal coordination delivered under a single engagement. The work extended beyond drafting separation documents and required translating a highly integrated operating model into a practical plan that allowed both businesses to operate independently while maintaining continuity throughout the transition.