Carve-out

By Patrick Heinemann

Carve-outs provide solutions to a wide range of business challenges. Whether it's raising capital in a rising interest rate environment, streamlining your focus on your core business operations, reducing your debt burden or enhancing your enterprise value, carve-outs can offer compelling opportunities.

Successfully carving out a business to form a new company requires a strategic partner with deep industrial and financial knowledge. Roland Berger can guide you through the entire process, helping you rise to three key challenges:

• Creating value. Unlocking and maximizing the value of a split-off or spin-off is our value-add at Roland Berger. Our strategic approach focuses on establishing a robust standalone company that is well positioned for success. We work closely with you to develop a clearly defined plan that optimizes operational efficiency, identifies growth opportunities and capitalizes on short-term hidden potential, while simultaneously uncovering further long-term opportunities. This positions your company for a higher valuation and enhanced profitability.
• Mastering complexity. Carve-outs involve complex processes that require a comprehensive understanding of legal, financial, technical and operational issues. We have the industrial expertise and the strategic experience to navigate these complexities effectively. Our team coordinates and aligns the different stakeholders, such as mergers and acquisitions (M&A) teams, legal advisors, auditors and representatives of strategic buyers, ensuring a smooth carve-out process and a successful outcome.
• Ensuring business continuity. Maintaining business continuity throughout the carve-out process is vital. We prioritize a seamless transition and aim to minimize disruptions to your operations. Our team focuses on managing risk, avoiding potential pitfalls and safeguarding the continuity and stability of both the new entity and the parent company's business.
  

At Roland Berger we are uniquely equipped to help you achieve value-creating carve-outs, from strategy to implementation. Our deep strategic industry knowledge, coupled with our proven track record of successful value creation in equity carve-outs and initial public offerings (IPOs), sets us apart. Our meticulous, robust approach to executing carve-out projects enables us to skillfully navigate complexities on both the seller’s and buyer’s side, while effectively managing the risks associated with the transaction.

Five phases of successful carve-outs

Our proven carve-out approach entails five phases:

1. The carve-out process begins with a strategic review to outline the objectives of carving out the business, defining the carve-out perimeter and strategic guidelines.
2. Next, blueprints for the new company must be developed. For this, we recommend using our PEAL framework (process and systems, employees, assets and intangibles, legal and contracts).
3. The third phase focuses on the implementation preparation and involves outlining detailed action plans, determining resource allocation, identifying potential risks and taking steps to mitigate them.
4. Phase four is the execution phase, in which the company is carved out according to the blueprints, ensuring a smooth transition of the assets, operations and personnel to the new entity.
5. Finally, the robustness of the company carve-out is tested to evaluate its effectiveness and address any remaining challenges.

These five phases are accompanied by a convincing communication strategy with consistent content tailored to internal and external stakeholders.

Value creation

At Roland Berger we are dedicated to helping you, as the parent company, unlock the full potential of your carve-out. Our performance-improvement DNA and proven results-driven approach enables us to identify and realize hidden potential in the carve-out transaction. We craft a clear scope for the divestiture, eliminating redundancies and providing potential acquirers with a compelling, transparent view of the asset's financial value and other benefits. We also create a captivating equity story that effectively translates your overall strategy into powerful growth and value drivers, ensuring the spin-off captures the attention and interest it deserves.

Communication and change management

Communication and change management are vital elements in successful company carve-out stories. Roland Berger can help your organization achieve a sustainable shift towards the target behavior, ensuring a successful transformation. We have developed a framework that can be tailored to support the planning and execution of any carve-out communications project. It covers every stage of the process, from identifying the main drivers of the strategy, including the business setup and organizational structure, to the preparation, concept and implementation phases.

Holistic CMO approach

According to a recent study by Roland Berger, the Carve-out Management Office (CMO) is a key success factor in carve-outs. We apply a comprehensive CMO framework that unleashes the full potential of your company's carve-out. Our approach is based on sophisticated project governance, results-oriented operational support, and clear reporting and meeting structures.

Carve-out due diligence (buyside)

On the buyside, we provide you with comprehensive support during the carve-out due diligence, together with our colleagues from the Roland Berger Investor Support function and our international industry experts. We thoroughly review and test the proposed carve-out framework and its content, investigate success factors and provide you with valuable recommendations about the company carve-out plan. We can also set up or assess your 100-day plan, ensuring a successful roadmap for post-carve-out integration.

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