Surviving Intercompany Arrangements in Carve-Out Transactions

A company seeking to sell a part of its business via a carve-out transaction must contend with a complicated series of separation issues in order for the business to be sold—the ‘‘carve-out business’’— to stand on its own. The carve-out business is likely to be intertwined with, and dependent on, its parent and sister companies and most of the carve-out business’s intercompany arrangements with these affiliates will need to terminated prior to the closing of the carve-out transaction.