Transition Services Agreement Advisory

Scope it, price it, and get both sides off it on schedule. We write the service schedule before signing, run the service-by-service exit, and eliminate the stranded costs the seller is left holding.
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Definition

What is a transition services agreement?

A transition services agreement is a contract in which the seller keeps running named services for the divested business after closing: payroll, IT, ERP access, accounting, customer support, procurement, and facilities, at an agreed price for an agreed term. It exists because the buyer cannot run those functions on day one. The exit is where it goes wrong. A TSA is written as a safety net and then becomes a permanent cost, because the seller keeps operating systems for a business it no longer owns and the buyer never builds the capability while the service is still arriving. By month nine both sides pay for a dependency neither wants. BD Emerson scopes the services, prices them, and drives the exit on a dated, service-by-service plan. We work both sides, seller and buyer, though never on the same deal.

  • Written for the exit: every service carries a target exit date, a named owner on each side, and an acceptance test that proves it is done.
  • Priced to step down: rates escalate at set months, so staying past the milestone costs more than leaving. Cost-plus pricing with no step-down is what turns nine months into twenty-four.
  • Stranded costs sized early: we quantify the headcount, licenses, contracts, and facility capacity the seller keeps after exit, then run elimination on the same calendar.
  • Both sides served: sellers on service delivery and cost recovery, buyers on standing up replacement capability, never both on the same transaction.
Services

What TSA services are included?

Nine workstreams that carry the transition services agreement from the first service schedule to final settlement. Most engagements start in one of two places: scoping the services before signing, or rescuing an agreement already running past its dates.

TSA scoping and the service schedule
TSA pricing and cost allocation
TSA exit planning and milestone design
Reverse TSAs
Standing up the buyer's replacement capability
Stranded cost elimination for the seller
TSA governance and dispute management
Extension and true-up negotiation
TSA close-out and final settlement

TSA scoping and the service schedule

We build the schedule service by service: what is delivered, at what volume, to which entity, measured how, and on what date it ends. Granularity decides everything downstream. A line that reads "IT services" can never be exited because nobody can prove it is finished. A line that reads Active Directory accounts, email, ERP read access, and tier 1 help desk can.

TSA pricing and cost allocation

We price each service off the seller's actual cost to serve: allocated labor, license fees, third-party contracts, and a defined markup, typically 3 to 10 percent. Then we build the step-down schedule so the rate rises at months six, nine, and twelve. Flat cost-plus with no escalation gives neither side a financial reason to finish.

TSA exit planning and milestone design

Each service gets an exit date, an owner on the seller side, an owner on the buyer side, and an acceptance test that defines the proof required to end it. Exits run in waves so dependencies clear in order: identity, network, and email first, then the applications sitting on them, then payroll and financial close at a period boundary.

Reverse TSAs

A reverse TSA runs the other direction, with the buyer providing services back to the seller. It comes up when the divested business held the manufacturing site, a shared supply contract, a data center, or the team that operated a system used across the whole company. We scope, price, and exit these on the same terms and the same calendar as the forward services.

Standing up the buyer's replacement capability

The buyer only exits when the work has somewhere else to land. We plan and run the replacement: system selection and implementation, data migration and reconciliation, third-party contracts assigned or replaced, and hiring for the roles the seller used to cover. Each item is resourced against the exit date it has to clear.

Read the IT carve-out guide

Stranded cost elimination for the seller

Stranded costs are what the seller keeps paying after the TSA ends, because the underlying capacity does not shrink when the volume does: shared services headcount, software licenses bought at the old seat count, data center and cloud commitments, leased space, and contract minimums. We size the exposure by category, then run the elimination plan against license renewal dates, contract notice periods, lease breaks, and organization design.

Read the carve-out financial statements guide

TSA governance and dispute management

Most TSA disputes come from scope creep, volumes above the schedule, or a service that was never properly defined. Governance settles those in the month they happen instead of at the extension negotiation.

  • A named service manager on the seller side and the buyer side
  • Monthly service review with a standing agenda
  • Issue log with owners and due dates
  • Escalation to a decision maker within five business days
  • Change control for anything outside the service schedule
  • Monthly reporting on volumes, spend, and exit progress

Extension and true-up negotiation

When a service will miss its exit date, the extension gets negotiated on facts rather than pressure. We also run the true-up on volumes and pass-through costs, so the seller recovers what it actually spent and the buyer is not billed for services it stopped using.

  • The reason the original exit date will be missed
  • A revised date with the remaining work itemized
  • The step-up rate that applies during the extension
  • Buyer commitments that make the new date credible
  • True-up of volumes and pass-through costs against actuals
  • Credits for services the buyer already stopped using

TSA close-out and final settlement

Close-out is where residual liabilities surface, so we run it as a checklist with named sign-offs and a dated record for the deal file.

  • Acceptance test signed off for every service
  • System access revoked and the revocation audited
  • Data transferred, then certified deleted where required
  • Final invoices and true-ups settled
  • Third-party contracts assigned, novated, or terminated
  • Close-out memo filed with the deal documents
Our approach

How we run a TSA exit

The exit is designed before the agreement is signed. Every service carries a date, an owner on each side, and a test that proves it is finished, and the pricing rises until it is.
01

Plan the TSA before signing

The service list comes out of the carve-out analysis, so scoping and pricing belong in separation planning. Agreements drafted in the last week before signing get written broadly, and broad schedules are the ones that never end.

02

Write the schedule at the service level

Each service gets its own line, carrying volume, service level, price, term, owners on both sides, and the acceptance test that ends it. A service that cannot be tested cannot be exited.

03

Price the step-down

Rates escalate at months six, nine, and twelve, so the cost of staying rises. The seller recovers cost to serve, and the buyer has a number on the page that makes hitting the date worth it.

04

Build the exit plan in waves

Identity, network, and email go first, then the applications that depend on them, then payroll and financial close, moved at a period boundary so the books stay clean and the first standalone close is provable.

05

Stand up the replacement

This is the buyer's side of the plan: system selection, implementation, data migration and reconciliation, contract assignment, and hiring, each resourced against the exit date it has to clear.

06

Run governance monthly

Governance runs on named service managers, an issue log with dates, and a five-day escalation path. Scope creep and volume drift get settled in the month they occur rather than at the extension negotiation.

07

Close out and strip the stranded cost

Sign off each acceptance test, settle the true-ups, then execute the seller's cost reduction: license true-downs at renewal, contract renegotiation, footprint reduction, and organization design sized to the smaller company.

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Stuck on a TSA that will not end?

Speak with BD Emerson about the service schedule, the exit dates, and the stranded costs sitting on either side of the deal.

Our Advantage

Why BD Emerson for TSA advisory

A TSA sits between the deal team, the finance function, and the IT organization, which is why it drifts. We put senior practitioners who have run separations from both sides on the file and hold the exit dates.

Senior practitioners on the file

The people who scope the services and negotiate the extensions are the people who have run separations before. There is no handoff to a junior team after the kickoff meeting.

One firm across the separation

Financial, tax, technology, and cyber diligence run under one roof, so the service schedule reconciles to the carve-out financials and the separation plan instead of to three vendors' documents.

We work both sides

We take seller mandates on service delivery, cost recovery, and stranded cost, and buyer mandates on replacement capability and exit readiness, but never both on the same transaction. Each side gets advice that already knows what the other will argue.

Findings carry past the report

The exit plan we write is the exit plan we run. Diligence and separation findings become dated milestones with named owners rather than a deliverable that stops at the recommendation.

Reviews

What our customers say

Great consulting firms for scaling security, compliance, and appsec.

Outstanding partner in Technical and Cyber Due Diligence

Appsec maturity and application hardening.

BD Emerson helped us simplfiy our compliance management.

BD Emerson did such a phenomenal job. What started as privacy support quickly became a full partnership across compliance, engineering, and even business operations. They’re embedded with our team. They understand our product. They move fast. They’re simply invaluable.

Adam Ben Jacobs

CTO @ OneStep GPS

Great consulting firms for scaling security, compliance, and appsec.

Outstanding partner in Technical and Cyber Due Diligence

Appsec maturity and application hardening.

BD Emerson helped us simplfiy our compliance management.

BD Emerson did such a phenomenal job. What started as privacy support quickly became a full partnership across compliance, engineering, and even business operations. They’re embedded with our team. They understand our product. They move fast. They’re simply invaluable.

Adam Ben Jacobs

CTO @ OneStep GPS

We had a hard time finding the right company to partner with in support of our compliance journey. Some vendors sell the idea that they do the work, but then you end up doing everything. The ambiguity is what killed our last project. BD Emerson’s team has such great technical knowledge and understands the standard so well that they made us comfortable with moving fast. This has led to us closing major enterprise customers that were previously out of reach because of security and compliance.

Tom Watkins

CEO @ AMI AssetTrack

Lead an enterprise initiative to overhaul the organization's technology stack from ecommerce, corporate tech, and corporate security.

Supported ISO 42001 exercise and served as internal auditor.

Rubrik's privacy and compliance team began with the backbone of BD Emerson. BD Emerson supported building out the privacy program, GRC (ISO 27001, SOC 2, CMMC, FedRAMP), and the appsec function.

We needed a partner who could move quickly, without sacrificing precision. BD Emerson brought the expertise, structure, and speed we were looking for. Their team became an extension of ours, embedding themselves across the organization, guiding us step by step, and giving us confidence in areas we hadn’t tackled before. The internal audit they conducted was so detailed that even the external auditors called it out. Achieving ISO 27001 with zero nonconformities says everything you need to know about the quality of the partnership.

Walid Souilem

CTO @ FGI Worldwide

We had a hard time finding the right company to partner with in support of our compliance journey. Some vendors sell the idea that they do the work, but then you end up doing everything. The ambiguity is what killed our last project. BD Emerson’s team has such great technical knowledge and understands the standard so well that they made us comfortable with moving fast. This has led to us closing major enterprise customers that were previously out of reach because of security and compliance.

Tom Watkins

CEO @ AMI AssetTrack

Lead an enterprise initiative to overhaul the organization's technology stack from ecommerce, corporate tech, and corporate security.

Supported ISO 42001 exercise and served as internal auditor.

Rubrik's privacy and compliance team began with the backbone of BD Emerson. BD Emerson supported building out the privacy program, GRC (ISO 27001, SOC 2, CMMC, FedRAMP), and the appsec function.

We needed a partner who could move quickly, without sacrificing precision. BD Emerson brought the expertise, structure, and speed we were looking for. Their team became an extension of ours, embedding themselves across the organization, guiding us step by step, and giving us confidence in areas we hadn’t tackled before. The internal audit they conducted was so detailed that even the external auditors called it out. Achieving ISO 27001 with zero nonconformities says everything you need to know about the quality of the partnership.

Walid Souilem

CTO @ FGI Worldwide

BD Emerson didn’t just help us meet our compliance goals; they integrated security and privacy into the core of our operations. I highly recommend BD Emerson to anyone seeking SOC 2 or GDPR compliance, or simply looking to enhance their security team and boost customer trust in their product and services. Their dedication and expertise have been invaluable to our success.

Padraig Reilly

CEO, Boxcore

BD Emerson understood our business requirements and worked side-by-side with us. The policies and controls we developed together not only meet compliance standards but improve how we operate day to day.

Matt Meierdierks

IT Manager, Lincoln Industries

From day one, BD Emerson brought urgency, clarity, and a sharp understanding of what truly matters to our business — earning and keeping customer trust. They went beyond helping us meet compliance requirements; they helped build a foundation for secure, scalable growth. That kind of partnership is rare.

Jason Marker

CEO @ LifeLenz

BD Emerson didn’t just help us pass an audit—they helped us build a sustainable culture of security.

Alexey Indeev

CTO Spare

BD Emerson was essential in helping our company navigate the daunting process of leveling up our security infrastructure. BD Emerson’s impressive expertise and confidence throughout the process helped our team exceed HIPAA and SOC 2 Type 1 standards quickly, distilling what can be an overwhelming process into a streamlined, organized effort. From day one they began adding value and getting us on course. With their help we delivered on a massive security overhaul with both extreme efficiency and thorough attention to details. Because of BD Emerson’s support, we’ve increased our clients’ trust in Titan Intake and the life-changing work it accomplishes for those seeking specialist referrals.

Patrick Bruce

CEO, Titan Intake

BD Emerson didn’t just help us meet our compliance goals; they integrated security and privacy into the core of our operations. I highly recommend BD Emerson to anyone seeking SOC 2 or GDPR compliance, or simply looking to enhance their security team and boost customer trust in their product and services. Their dedication and expertise have been invaluable to our success.

Padraig Reilly

CEO, Boxcore

BD Emerson understood our business requirements and worked side-by-side with us. The policies and controls we developed together not only meet compliance standards but improve how we operate day to day.

Matt Meierdierks

IT Manager, Lincoln Industries

From day one, BD Emerson brought urgency, clarity, and a sharp understanding of what truly matters to our business — earning and keeping customer trust. They went beyond helping us meet compliance requirements; they helped build a foundation for secure, scalable growth. That kind of partnership is rare.

Jason Marker

CEO @ LifeLenz

BD Emerson didn’t just help us pass an audit—they helped us build a sustainable culture of security.

Alexey Indeev

CTO Spare

BD Emerson was essential in helping our company navigate the daunting process of leveling up our security infrastructure. BD Emerson’s impressive expertise and confidence throughout the process helped our team exceed HIPAA and SOC 2 Type 1 standards quickly, distilling what can be an overwhelming process into a streamlined, organized effort. From day one they began adding value and getting us on course. With their help we delivered on a massive security overhaul with both extreme efficiency and thorough attention to details. Because of BD Emerson’s support, we’ve increased our clients’ trust in Titan Intake and the life-changing work it accomplishes for those seeking specialist referrals.

Patrick Bruce

CEO, Titan Intake

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FAQ

Frequently asked questions

What is a transition services agreement?

What does a TSA typically cover?

How long do TSAs run?

What does a TSA cost and how is pricing structured?

What is a reverse TSA?

How do you plan a TSA exit?

What happens if the buyer is not ready to exit?

What are stranded costs and who bears them?

How do you scope services so the exit is measurable?

What goes in a TSA schedule?

When should TSA planning start relative to signing?

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