In a reverse carve-out, the business that is "staying" is often the one under the most pressure.
Here's what nobody tells you going into a reverse carve-out: the business that's "staying" is often the one under the most pressure.
People, systems, processes, property, locations — every carve-out touches all of it. But in a reverse structure, the retained business bears more of that load, because it's the one moving into unfamiliar ground:
• New legal entity means new EIN, new bank accounts, sometimes new tax registrations • Contracts and vendor agreements have to be re-papered or re-negotiated from scratch • Systems and data have to migrate out of infrastructure that's staying with the divested business • Employees have to be re-badged, re-enrolled in benefits, sometimes re-onboarded entirely • Leadership has to communicate a confusing message: "We're the ones staying, but we're the ones changing everything."
That last one is the hardest part to manage — because intuitively, people expect the business being sold to feel the disruption. When it's reversed, communication and change management have to work twice as hard to keep the retained team from feeling like they got the short end of a deal they "won."
In one recent reverse carve-out, a number of critical systems and processes hadn't been captured in the initial TSA. As my team and I dug into the onsite systems, we found facilities that would remain physically shared — warehouses, office locations — but needed separate, distinct access controls. We also had to find an IT service provider that could support operations across Australia, Mexico, the U.S., and South Africa. We landed on a provider based in South Africa to ease the broader language and time-zone issues, and paired that with a separate provider for onsite technical support at the main office in Dallas.
If your business is heading into any kind of divestment — standard or reverse — the structure isn't just a legal technicality. It determines who does the hardest work of the deal. Happy to talk through which side of that equation you're on.