Carve-out Transactions: How They Differ from a Typical Acquisition

What is a carve-out transaction? And what makes it different from a typical acquisition?

As persistently higher interest rates and inflation pressure dampen the earnings outlook, corporations have begun to focus on opportunities to raise cash from divestiture of non-core business segments. On the surface, these carve-out transactions may present a compelling opportunity to acquire a mature business, but there are often hidden challenges below the surface that can impact the buyer’s ability to produce transformative growth and profitability improvements.

Digital due diligence—often undertaken in tandem with other diligence streams including financial, tax, and commercial activities—can aid in assessing entanglements with parent systems and operations that need to be addressed to unlock the true growth potential of a carve-out acquisition strategy.

In this episode of Acquire. Optimize. Realize., Cherry Bekaert’s Cameron Smith, Director, Transaction Advisory and Private Equity Services, talks with Steven Sparks, Director, Digital Advisory Services, about the distinguishing features and mechanics of a carve-out, including complexities and execution tactics, and what motivates buyers and sellers to undertake these transactions.

Cherry Bekaert’s Transaction Advisory, Private Equity, and Digital Advisory teams are available to discuss challenges, opportunities, and how we may be of resource to you.

You can contact our team for specific questions related to your M&A objectives.

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