Tsa Transitional Service Agreement

By December 19, 2020 No Comments

The price structure of TSA services must be clearly defined and structured, based on well-measurable metrics – z.B for support employees, MIPS for computing power, $/GB for memory, etc. Each TSA service must be independently calculated where possible. Avoid a situation where the price of a TSA service depends on or is related to another TSA service – this will make it difficult to leave individual services without leaving all services. A global healthcare services company, active in the biopharmaceutical and medical device sectors, has begun the integration of a global division. Integration efforts have spread to more than 70 countries, with different operating structures and the use of several computer systems. The challenge for the company was to ensure a rapid exit from the regional TSA in all regions, while maintaining the continuity of global business. Indira Gillingham, senior manager, and Mike Stimpson, senior manager at Deloitte Consulting LLP, provide practical advice on using ASD to achieve a quick and clear separation. An ASD can expedite the negotiation process and financial conclusion by allowing the agreement to be reached without waiting for the buyer to assume responsibility for all critical support services. Carveouts are among the most complex transactions. This is particularly the case when it comes to the sale of an integrated industry in the rest of the parent company`s business. In such transactions, the seller may be required to continue to provide the buyer with assistance for critical services after closing. This support is formalized by a Transitional Service Agreement (TSA) and includes one of the documents signed at the time of conclusion (in addition to share and/or asset sales contracts).

From the buyer`s point of view, ensuring that an ASD is structured as efficiently as it balances business continuity and ensures support and reliability, while ensuring fair service costs, is a key factor in successful deals. Here are some of the most important considerations in the structuring of an ASD: the structuring of performance criteria should also include the potential effects of non-compliance by third parties participating in the provision of the TSA service. Determine in advance whether third-party agreements and licenses with vendors and service providers need to be changed.