Phases and approach for carve out assignments

1. Selling of Company Parts
Introduction to
Framework Carve Out
Carve out

2. Content
Lucentis Consulting
Our approach
Hard stuff – general approach

3. Our approach

4. Our approach
Carve Outs are about business and financials …
but not only that…
We approach Carve Outs not only via the
hard stuff:
Focus on People
Focus on Engagement
Focus on Communication

5. Focus
Focus on People
People do the work
People are the voice and representatives of the company
People make the difference
Employees need respect & recognition
Employees are valuable

6. Focus
Focus on Engagement
Management lead by example (certainly in times of tension, change …)
Management inspire employees
Engagement will lead to trust
Trust is the foundation for teamwork
Teamwork foresee in continuity
Employees will be engaged when there
is trust, results in cooperation and dedication
Utterly: To have a team that’s WILLING
to work WITH

7. Focus
Focus on Communication
Transparant communication from top to bottom and up…
Making clear agreements and goals
Inform the target group on a regurarly bases
Take time for an informal walk & talk
Celebrate succes
Communication result in commitment

8. Hard Stuff – General approach

9. Overall Goals of Carve Out
Maintain, regain trust from stakeholders (employees, business partners,
mgmt, customers, public)
Maintain, regain capacity to act (individually, as teams, as orginanisation)
Support Management leading in times of transition
Foster orientation in an ambiguous, threatening and therefore stressfull
situation for the organisation
Foster a proactive spirit of optimism attitude in the relevant organisation
Change view on situation – to open perspective and opportunity mindset
Carve out the strengths of the to be sold company to be able to harvest and
build on them inside the new company

10. Questions to manage a Carve Out
What are the major parameters and guidelines from the Selling Company for the
divestment? Where do they come from?
What are the concrete specific, precise goals for the divestment beyond “achieving
the greatest monetary value for the Selling Company”?
Who are the key-stakeholders, what are their main interests?
Who has set up the divestment time plan and based on what? What are the
milestones in the process?
From the Selling Company’s management point of view, what’s possible/thinkable?
What’s not?
How much involvement of /participation of /openess to the affected
management/organisation is acceptable? If none, what speaks against partially
involving?
What’s the magnitude of trust in the loyalty of affected managers? Why?
What are the greatest risks in the divestment process? What’s planned to prevent
them from happening?

11. Stakeholders and Interests
•Price/Max value for the business
•Continuity of the sold business
•How to keep employees in business and motivated
•Reach an agreement with the buyer, and what’s acceptable for employee representatives
•Keep the time of insecurity as short as possible
Selling Company
- To be sold organisation
- To be sold mangement
•Get the best package/result for the to be sold organisation
•Balance the interest of remaining and leaving employees = Tension Field!!
•Stay with the organisation – avoiding the unknown
•Respect from the selling organisation
•Clarity and transparancy during the sales process
•Securing the health of the NewCO
Employee Representatives
Affected Employees
•Gain maximum value for money
•Understanding of the business
•Reach maximum transparancy about the to be bought business
•Strenghts/Weaknesses of the business
•Strategic fit
•Keep the time of insecurity as short as possible
Potential Buyers

12. Types of Carve Out
Stand-alone carve-out
Carve-out object as a stand-alone organization without
integration into the buyer
Merger carve-out
Third party organization as buyer of the carve-out object
Joint venture carve-out
Fusion of two equipollent organizations to a new
organization

13. Phases of Carve Out
Emotional
journey
Personal/Individual
Processing
Team/Organisational
Processing / Sales
Prep
Buyer
announcement
Prepare for buyer &
integration
Day One – Legal
Transfer
Time
CapacitytoAct
Phase 1
Pre-
announcement of
selling intention
Phase 2
Announcement of
selling intention
Phase 3
Buyer Search
Phase 4
Buyer
annoucement
Phase 5
Integration
preparation
Phase 6
Day One

14. Phases IT Carve Out

15. IT Carve Out Strategies
Retention: IT remains at the parent
company
Transition: IT of the acquiring
company is used
Greenfield: IT is built from scratch

16. Carve Outs
Strategy
Selling
organization
Subsidiary
Buying
organization
Transition
Data
extraction
• Business & IT staff
training
• Business process
adjustments
• IT adjustments
• Data import
New-build
Data
extraction
• Business & IT staff
training
• Business process
adjustments
• Data import
• Interface
development
Retention
Data access
separation
• Interface
development
• Interface
development

17. Ideal IT cooperation model

18. IT elemens effected by carve out

19. Data Classes
Data class Criticality criterion
Personal data
• Critical according to the organizations guidelines and/or data
protection regulations of the governments
• Critical if data is kept in a personal data IT system (person’s name in
conjunction with birth date, salary, biography, etc.)
• Not critical if data reveals general communication details (e.g., E-
mail, addresses, company phone number, user identification)
Organizational
data
• Critical if classified as being critical by at least one of the participants
due to business interests
• Critical if data is considered confidenfial or secret
• Critical if data is internal but business departments decide it has to be
accessed exclusively
• Not critical if data is publicly available
Anti-trust data
• Critical if data allows conclusions about non-public information of an
organization's competitive behavior, business areas, internal details
(e.g., purchase price, order quantity, delivery conditions,
investments, research)
Third-party data
• Critical if data has to be treated confidenlialy in regards of a third
party (e.g., supplier product design data, testing results, delivery
reliability)
• Critical if data reveals information about the quality of third parties
products and services (e.g., quality reports)

20. General workstream 1

21. General workstream 2

22. IT Workstream plan

23. IT Workstream

24. template application intake
Name of the application
Frequency of use
User groups
Age of the application
Underlying and used
technology
Input data from other systems
used by the application
Application architecture
(standalone or highly
integrated)
Business relevance
(business critical or business
support for IPS)
Number of licenses
Application owner
Location where the application
is used and hosted
Justification for application use
(reason for keeping application
alive at IPS)

25. Lessons Learned from IT Carve Outs
1. Build collaboration between the seller's carve-out team and the buyer's integration team
2. Allocate resources dynamically, leveraging external recources
3. Devote special attention to local differences
4. Design flexibility into Transitional Service Agreements
5. Establish a dedicated team to manage retention and support personnel transfers
1. Facilitate awareness of business dependencies on IT
2. Include IT leaders in strategic decision-making teams
3. Routinely review IT standardization and customization trade-offs
4. Maintain full and up-to-date documentation on the IT landscape
5. Include retention clauses in contracts for key IT personnel
Managing Carve-out Projects
Creating a Divestiture-ready IT Enviroment