Often, the seller must rely on his own suppliers and service providers to provide services to the company after closing. Determine whether the seller has sufficient rights under its existing upstream contracts and licenses to provide the requested services on its own, or whether third-party agreements and licenses need to be entered into or modified with vendors and service providers. Consider the criticality and complexity of the services requested, as well as the cost and timing of the conclusion or modification of third-party agreements (given the possibility of third parties having reasonable leverage and little incentive to provide short or transitional services). When a business is sold as part of an AM transaction and the seller continues to provide support services to the post-closing business, the parties to the transaction will enter into a Transitional Services Agreement (TSA) that regulates the provision of such services to the post-closing company. Depending on the complexity of the transitional service agreement and the critical nature of the services provided, ASDs can range from short, back-office administrative agreements with an agreement on setting fees in the future and without formal service standards, to comprehensive service agreements with a defined scope, service levels, variable pricing rules and detailed data protection rules. Practical advice for using Transition Service Agreements (ASDs) to achieve a quick and clean separation. An effective governance structure can help companies quickly assess and resolve ASD issues. It will enable the Director of Integration to make operational decisions consistent with the TSA guidelines. The governance structure is operational at all stages of the TSA – scoop, negotiation and execution – and the right teams should be available to evaluate service level agreements, ASD prices and payments between the two companies. A Transitional Service Agreement (ASD) is concluded between the buyer and the seller, who envisages the seller to provide assistance to the infrastructure, such as accounting, IT and human resources, after the transaction is completed.
TSA is common in situations where the buyer does not have the management or systems to absorb the acquisition, and the seller can offer it for a fee.