A transition service agreement (TSA) is an agreement between a buyer and a seller in which the seller provides services and support to the buyer once the seller has sold his/her business so that the buyer can continue with business operations.
It’s highly critical in mergers and acquisitions (M&A) to ensure that the business continues its operations just like before. Though understanding the concept of TSA is not that hard, it’s the terms and conditions of the TSA agreement that create challenges.
In this article, we’ll understand the nuances of TSA. What are the benefits of TSA? The main purpose of TSA is to ensure that the small details in the transaction are not overlooked, thus facilitating smoother transactions. Clearly define what is sold.
Clearly outline what is being sold and retained after Divestment Separation. Establish clear transition plans for employees, customers, and suppliers to avoid any confusion later on. A TSA can help mitigate the risk associated with the separation process.