Middle East – Bain & Company’s latest insights, You’ve Decided to Buy a Carved-Out Business. Now What?, examine how acquirers can harness the full potential of divested businesses, while avoiding the common pitfalls that jeopardize success.

Buying a divested business can be a strategic way to reshape your portfolio and jump-start growth. Whether the objective is to expand into new markets, fill gaps in a product portfolio, or gain quick access to revenue, customers, operational capacity, and talent, carve-outs can create significant value for acquirers. But too many buyers focus only on getting to Day 1 and overlook the need for a solid integration thesis linked to the deal thesis and key value drivers.

Bain’s M&A Practitioners 2025 Outlook Survey reveals that cultural differences and process and technology issues are the biggest challenges in integrating carve-outs—followed by negotiating transition service agreements (TSAs), talent issues, and defining the carve-out perimeter. These issues must be proactively addressed from the outset.

The most successful carve-out acquisitions start with due diligence that identifies both the carve-out-specific elements and the value creation plan required to underwrite the deal. They develop a solid integration thesis linked to essential value drivers and carve-out components.

Here’s Bain’s advice for buyers to address these issues:

  • Use cutting-edge diligence to assess the carve-out situation (e.g., perimeter, entanglements, standalone costs) and its impact on value creation. It’s essential to dig deep into people, systems, and assets—including contracts and IP—and identify areas where TSAs or a build-out/integration plan are needed for Day 1. Diligence should also highlight commercial implications, such as distributor gaps or risk from comingled contracts.
  • Accelerate process and systems decisions. In a carve-out, critical interactions such as invoicing customers, paying employees, and ensuring product availability must continue seamlessly on Day 1. This requires early decisions on cross-functional processes and systems to be kept, cloned, built, integrated, or retired.
  • Plan and utilize TSAs strategically. While TSAs are an important mechanism for continuity on Day 1, buyers and sellers have different motivations for a TSA’s scope and duration. Instead of operating on general rules of thumb like, “We need longer TSAs” or “We need to negotiate the best possible service,” buyers should look at TSAs as a bridge to achieve the integration priorities.
  • Set the tone on people and culture. Buyers often has limited visibility into the talent and the capabilities needed to operate. In addition, carve-out employees may feel undervalued, and sellers may be reluctant to let the buyer interact with them.Top acquirers work with the seller early to identify key talent, define talent movement metrics, and establish a compelling future vision. They activate leadership to ensure employees feel valued and aligned.
  • Plan for and execute Day 1 in a way that mitigates risk and prepares for the future state. While many acquirers see a smooth Day 1 as a win, the best carve-out acquirers prepare for cutovers at TSA exits with detailed plans to deliver synergies and future growth.

Carve-outs can be attractive acquisitions that represent unique growth opportunities. But unlike full company acquisitions, carve-outs can break on Day 1 if things are not planned and managed well.

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To arrange an interview or for further information, please contact:
Christine Abi Assi – christine@daydreamer.agency

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