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From Parent to Stand-Alone: A Due Diligence Playbook for Carve-Out Transactions

Value creation looks vastly different today than it did even five years ago. While carve-out transactions can create significant opportunities for investors, they also introduce operational, financial, and separation challenges that may affect value long after close.

For buyers, sellers, and deal teams, assessing an organization's true earnings potential requires diligence that goes well beyond a standard deal checklist. Our team developed the From Parent to Stand-Alone: A Due Diligence Playbook for Carve-Out Transactions to help teams transition to stand-alone operations.

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Carve Out Transaction

In This Playbook

Key Diligence Areas Covered in the Playbook

The playbook walks deal teams through diligence areas that are often underweighted in carve-out transactions, including:

Use the playbook to pressure-test assumptions, uncover hidden separation risks, and prepare for a smoother transition.

How to evaluate whether the target's revenue streams and customer relationships are sustainable once separated from the parent company

How to assess cost allocations when shared services are no longer available

How to identify intellectual property rights that could introduce separation risk

How to spot employee retention and management gaps that could threaten the transition

How to understand tax structure changes once the business operates on a stand-alone basis

How to evaluate IT, cybersecurity, and AI-related dependencies that may affect separation planning

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Cory Markling

Cory Markling

Partner