IT Carve Out in Divestments

Question 1

What is meant with conglomerate discount?

Answer 1

Conglomerate discount - Stock traders prefer to pick their companies themselves. Therefore, it is normal to see a conglomerate with multiple different businesses have a lower valuation than if they were multiple individual companies.

Question 2

What are the reasons for divestments?

Answer 2

• Changes in organizational focus or strategy (Ørsted)
• Weak economic performance
• Need for capital.
• Antitrust laws.
• Conglomerate discount

Question 3

Explain the IT-carve out process

Answer 3

Divestiture decision
- Deal making (Due diligence and negotiation)
Day Zero (Signing)
- Carve-out project (Achieve legal day one readiness, disintegrate information systems, manage TSA’s)
Operational Day One (Cutting IS)
- Manage TSA’s (Continued)
- Post cutting activities.

Question 4

What makes a carve-out complex?

Answer 4

• The number of interlinked IT-based activities
• The respective degrees of difficulty required to separate the carve-out business unit’s IT from both the IT application portfolios of the vendor’s other business units and the vendor’s corporate shared IT infrastructure.

The complexity has an effect on Time, Cost and Quality

Question 5

Which operations can be chosen to be done during a carve-out?

Answer 5

Data extract
System Transfer
System Replication
TSA

Question 6

What is the target of Maersk Divestment team?

Answer 6

• Ensure business continuity - by delivering a fully operational entity to buyer.
• Protect the company by ensuring tight security compliance and total cut-off after legal separation.

Question 7

What is the most and least complex operation of an IT carve-out?

Answer 7

1. Data extract.

4. Business service TSA/IT TSA: TSA used if secure access and data segregation is possible.