A business division can look profitable inside a large group while requiring additional resources to operate independently. Rajeev Khandelwal’s documented M&A financing experience provides context for that challenge. Shared finance teams, procurement, systems and facilities may not appear at their full replacement cost in the division’s reported results. A carve-out buyer needs to understand what must be rebuilt after the unit leaves its existing parent.
Map the shared services
The diligence process should identify which functions are provided centrally and how they are charged. Historical allocations may not represent the cost of obtaining equivalent services independently. The buyer should build a practical standalone operating model, including staff, systems and external support. This prevents the acquisition case from assuming the business can continue earning its reported margin after services it previously relied on are removed or repriced.
Use transition arrangements deliberately
Temporary support from the seller can help maintain continuity, but it should have a clear duration and exit plan. The buyer needs to know what the arrangement covers and what it excludes. A transition agreement is most useful when it buys time for a defined replacement programme. Without that programme, the acquired company can reach the end of the support period still dependent on systems or people it does not control.
Examine commercial separability
Customers and suppliers may have contracted with the parent rather than the division. The buyer should understand which relationships transfer and what approvals or new arrangements are required. Brand use and purchasing scale can also change. These issues affect both revenue and cost, so they belong in the financing model rather than being treated as administrative details to resolve after the purchase price has already been agreed.
Buy a complete operating future
Credit Connect’s M&A advisory discipline connects the carve-out question with Rajeev’s professional ecosystem. The commercial task is to evaluate the business as it will exist after separation. A strong investment case explains the services, contracts and resources that make it independently workable. That perspective helps the buyer distinguish attractive historical results from the cash generation it can realistically expect once the division becomes a standalone enterprise.
