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Morgan Lewis helps clients plan for and execute carve-out transactions. Our Carve-out Transactions Task Force brings together a team of lawyers working seamlessly across multiple disciplines to help our clients meet the challenges of and take advantage of the opportunities presented by today’s markets. We represent a broad array of clients in a variety of industries, including private equity firms and large multinational strategic purchasers. The Task Force's breadth of experience enables the firm to deploy a team of professionals that is immersed in the interests and issues particular to the individual client.
Carve-out transactions (i.e., the sale of subsidiaries or divisions of a larger business enterprise) present unique issues from both the seller’s and buyer’s perspective that require advance planning and focused attention on key areas. Identifying these issues in advance and planning for them is essential in order to maximize the deal value. Particular areas of focus include:
- Financial statements
- IT systems
- Intellectual property/licensing
- Commercial contracts
- Employment
- Real estate
- Tax
We anticipate that the current economic climate will lead companies to engage in an increasing number of carve-out transactions. We expect that carve-out transactions will be a dominant part of the M&A market over the next few years, similar to the recent increase in distressed company acquisitions. Virtually every financial and strategic investor and intermediary will need to be well versed in these projects and the unique and challenging issues they present.
Despite the complications, the benefits of a carve-out transaction are readily apparent. From a seller's perspective, the divestiture of certain assets or business lines can refocus the company on core businesses or make cash available for the development of remaining core assets. Strategic buyers, on the other hand, value the assets due to synergies with existing business lines and the opportunity to expand into new business areas. Financial buyers value carve-out assets for the potential growth that can be unlocked through more focused management attention and infusion of capital. Morgan Lewis has experience in representing both buyers and sellers, enabling smooth transactions and orderly transitions.