Carve out

A carve out is materially harder than selling a whole company, because the thing being sold does not yet exist independently. Shared IT, group functions, intercompany contracts, pension arrangements and often the accounts themselves have to be separated.

That produces carve out financials, a constructed view of what the division would have earned alone, which is inherently an estimate. Allocated central costs are the contested part: what the parent charged is rarely what a standalone business would actually spend.

Stranded costs are the mirror problem for the seller. Overhead that supported the division does not disappear when it goes, so the remaining group carries costs against a smaller revenue base.

Transitional service agreements bridge the gap, with the seller providing IT, payroll or similar for a defined period after completion. Their scope, duration and pricing are negotiated as part of the deal.