The TSA Exit Starts Before Close

The TSA Exit Starts Before Close

A transition services agreement can keep a carved-out or acquired business operating after completion. It can also leave the buyer dependent on the seller for systems, data or essential processes with no credible route to independence.

Treat the exit plan as part of the deal design, not a clean-up task for later. Deloitte’s guidance on transition service agreements highlights the need for defined scope, governance and an explicit exit strategy. Deloitte, Recommendations for TSA negotiations Deloitte, Design and manage transition service agreements

Start with the service, not the spreadsheet

List each service the seller will provide and the business outcome it supports. For each one, name the buyer-side owner, seller-side contact, systems and data involved, service expectations, charging basis, dependencies and the event that ends the service.

Avoid vague entries such as “IT support” or “finance assistance”. Break them into services that can be assigned, tested and exited. If the buyer cannot identify what must replace a service, the exit is not planned.

Give every service an exit test

An end date is not proof of readiness. Define the evidence that will show the buyer can operate safely without the seller. Depending on the service, that may include tested access, reconciled data, trained staff, a functioning process, an approved control or a successful operational rehearsal.

Map dependencies between services. A new finance platform may rely on seller-hosted data. A standalone payroll process may still depend on identity access or a shared support team. If one service cannot end until another is ready, make the sequence visible and assign an owner.

Make the commercial exposure visible

Review service volumes, pricing, minimum commitments and the process for raising exceptions. Track actual use against the agreed scope. Escalate requests for out-of-scope support before they become the assumed operating model.

Maintain a decision log for extensions, scope changes and unresolved risks. An extension may be justified. It should be a conscious decision with a revised exit date, cost and readiness plan, not a silent rollover.

Put a named executive on the exit

A TSA crosses technology, operations, finance, people and legal work. A central integration or separation lead should own the overall exit plan, while functional owners remain accountable for evidence that their service can end.

Review progress against exit tests, dependencies, cost and open risks. Where the buyer is not ready, show the options and consequences plainly. “We are working on it” is not a decision.

The transaction is not operationally independent because the agreement says the service is temporary. Define the destination, prove readiness and govern each exit. That is how a bridge stays a bridge instead of becoming infrastructure.