MC

Knowledge Base

Methodology, glossary, and playbooks for separation economics diligence — written for the deal team, not just the model.

Knowledge Base/Functional Area Primers
Functional Area Primers
2 min read

IT / Technology

Usually the largest and least certain stranded-cost category — ERP separation alone can swing a model by tens of millions.

IT separation is typically the single largest and lowest-confidence line in a separation economics model, because the true cost usually depends on a vendor statement of work that isn't finalized until well into diligence.

  • ERP separation or re-implementation (SAP, Oracle, NetSuite instances shared across the parent)
  • Identity, network, and security infrastructure disentanglement
  • Software license re-pricing when enterprise-tier volume discounts no longer apply
  • TSA dependency for core systems until the buyer stands up independent infrastructure

Common mistake: Treating the vendor's first-pass ERP separation quote as a base case rather than a downside-leaning estimate. Vendor SOWs for separation work are notorious for scope creep once implementation starts — a 30–40% contingency on early vendor quotes is a defensible starting assumption, not padding.

Typical persistence: 18–36 months, tracking the length of the TSA covering core systems.