Tsa Transitional Service Agreement



An effective program governance structure can help companies assess and resolve TSA issues quickly. It will enable the integration officer to make operational decisions consistent with the guiding principles at the ASD program level. The governance structure is operational at all stages of TSA – scoping, negotiation and execution – and the right teams should be in place to assess service level agreements, TSA pricing and payments between the two companies. A diversified industrial company divested activities in its portfolio. Companies have tended to be highly centralized and have used a shared service center for back office, IT, HR, and purchasing. The activities of the companies also mixed distribution and manufacturing. KPMG was tasked with helping the client identify entanglements and develop a Day 1 operating model for “a typical asset in the portfolio”. This first exercise was the model for determining what a buyer should replace and what the seller would be willing to provide, and specific data elements were collected to help the customer determine prices and service levels. For example, in back-office processes, PPAs were collected and FTE estimates were made to support the processes. The high-level benchmarking allowed the client to determine how long it would take for a buyer to replace the services (i.e. by outsourcing) and how long the client would need to reduce lost costs. Scope, duration and LTC were documented in service plans used by the client as a starting point for its divestiture work.

By working with functional teams, the company determined which services it would not provide and which services would be difficult to provide. The interweaving gave rise to possible measures that the client was willing to undertake before future restructurings and divestitures. At the end of the fiscal year, the client team worked with members of the company`s development team to develop a common understanding of the trade-offs between different TSA options. The escalation trajectory for TSA performance, service discontinuity, and emergency issues must be agreed upon prior to closing. One possibility is to set up a joint steering committee, with the participation of important leaders from both sides, who meet regularly (bi-monthly, etc.) during the EBA period, in order to solve important problems. This forum can be supplemented with additional touchpoints for certain TSA services – for example.B Payroll, Accounting, Systems, etc. The escalation protocol for dealing with issues involving third parties should also be agreed prior to conclusion (including the necessary agreement of the 3rd parties involved). The structuring of the performance criteria should include the potential effects of non-compliance by third parties involved in the provision of the TSA service. Determine in advance whether Part 3 agreements and licenses need to be changed with the seller`s suppliers and service providers. A global healthcare company, active in the biopharmaceutical and medical device sectors, has completed the integration of a global business unit. Integration efforts have expanded to 70 countries that have different operating structures and the use of multiple COMPUTER systems.

The challenge for the company was to ensure a timely exit from tsa in all regions, while maintaining continuity of global business. The company, supported by KPMG, quickly developed a comprehensive TSA program management team and rigorous governance process with the vendor to facilitate communication, resolve issues, and manage change requirements.