Divestitures: You Just Sold A Load-Bearing Wall …

2026-07-08 · Source: Featured Blogs - Forrester · Field: Business & Management — Corporate Strategy & Leadership, Operations & Process Management · Depth: Intermediate, medium

Summary

Divestitures, or carve-outs, are often mistakenly viewed as clean subtractions, leading to significant unforeseen challenges for the selling entity. The article highlights that divested units are deeply integrated, sharing systems, data, networks, and contracts, creating reverse dependencies often missed in planning. This results in unbudgeted cost increases for the parent company, as enterprise agreements priced on combined volume (e.g., ERP licenses, cloud commits) reset to higher rates post-divestiture. Furthermore, deal teams frequently make technical commitments, such as 90-day transition service agreements (TSAs) for ERP access, without consulting IT. These commitments often prove technically unfeasible, leading to extensions, stranded costs, and the CIO becoming the "last line of defense" for a deal, propping up the divested entity long after the sale. The author argues that separation is not merely acquisition in reverse and requires a strategic shift to map reverse dependencies and involve technical leadership early in deal negotiations.

Key takeaway

For CTOs and IT leaders navigating divestitures, you must proactively identify and map reverse dependencies from the divested unit to your core operations. Insist on being a core input in deal negotiations from day one to prevent unfeasible technical commitments, like short-sighted TSA timelines, from being made without your team's input. Price potential TSA extensions and scope creep into deal economics to avoid stranded costs and operational burdens that erode the deal's intended value.

Key insights

Divestitures are complex untangling operations, not simple subtractions, often creating unforeseen costs and technical burdens for the seller.

Principles

• Divestitures are complex untangling, not clean subtraction.
• Unmapped reverse dependencies create post-divestiture burdens.
• Deal models often miss costs from broken dependencies.

Method

Map reverse dependencies, involve technical leadership in deal shaping, and price potential gap-fill and TSA extensions into deal economics.

In practice

• Map reverse dependencies from divested unit to parent.
• Integrate CIOs into deal shaping from initial stages.
• Budget for TSA extensions and scope creep in deal economics.

Topics

• Divestitures
• Carve-outs
• M&A Strategy
• Transition Service Agreements
• IT Due Diligence
• Enterprise Resource Planning

Best for: Executive, CTO, IT Professional, Operations Professional

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Editorial summary, takeaway, and curation by AIssential. Original article published by Featured Blogs - Forrester.