How to Separate Shared Systems and Contracts Pre Sale

Why separation matters

When a business prepares to divest a non core division or subsidiary, one of the biggest challenges is untangling the shared systems, contracts, and infrastructure that support the wider group. Buyers expect clarity. They want to understand exactly what they are acquiring and what operational support the business will need from day one. If shared processes are poorly defined or not separated before going to market, it increases perceived risk and can reduce value or delay completion.

Divestable focuses on helping business owners prepare non core assets for sale with clean, well structured transitions. Separating shared systems and contracts early makes the sale smoother, faster, and far more attractive to strategic and financial buyers.

Where complications typically arise

Most groups develop shared systems and contracts over years. When the time comes to divest, the interdependencies become clear.

Shared IT and software platforms

Divisions often run on group wide CRM systems, finance software, HR platforms, servers, email domains, and cloud storage. Buyers need to know what technology belongs to the unit being sold and how easily it can operate independently.

Group wide supplier contracts

Utilities, telecoms, insurance, transport, facilities, IT support, and marketing services are frequently procured under a group contract. Transferring, novating, or replacing these arrangements is rarely straightforward.

Intercompany cost allocations

Divisions may rely on central services charged through inter-company agreements that are not clearly documented. Buyers expect transparency in cost structures.

Cross charged staff and shared management

Shared HR, finance teams, senior managers, or technical specialists can complicate what is included in the sale. Buyers need clear definitions of who stays and who belongs to the parent.

Blended customer or supplier relationships

Some divisions share contracts with the wider business. Separating these without damaging customer service requires careful planning.

Steps to separate shared systems and contracts effectively

A clean separation increases deal certainty and protects value. The following steps help create clarity before going to market.

Map all shared systems and dependencies

Create a detailed record of every shared platform, service, and contract that touches the division being sold. This includes IT systems, HR functions, finance processes, suppliers, and facilities. Without a full map, separation becomes guesswork.

Create a standalone operating plan

Outline how the division will run once independent. Identify new systems that must be implemented, contracts that need novating, and services that require replacing. Buyers value clear, realistic transition plans.

Assess contract transferability early

Some third party contracts can be easily transferred. Others cannot. Engage suppliers early to confirm whether novation is possible, if new agreements are required, and whether termination costs apply. Surprises at the eleventh hour weaken negotiation leverage.

Build transitional service agreements where required

In many cases, the parent company will need to provide certain services for a defined period post completion. A clear and well scoped Transitional Service Agreement helps keep the deal moving and gives the buyer confidence in operational continuity.

Establish clean financial reporting

Ensure the division has standalone financial statements, with all intercompany charges clearly documented and justified. Buyers will scrutinise cost allocations, overhead recovery, and normalised profit levels.

Document processes and responsibilities

Buyers want to know who does what. Ensure operational, financial, and administrative processes are fully documented. This reduces perceived risk and improves the buyer’s ability to integrate the division.

How clean separation supports a stronger sale

A division that is ready to stand alone commands a higher valuation. Clean separation reduces buyer risk, accelerates due diligence, and creates stronger competitive tension. It also demonstrates professionalism and gives buyers confidence that the parent company understands the asset and is committed to a smooth transition.

In contrast, poorly separated systems and contracts lead to delays, uncertainty, and late stage price reductions. Preparing early protects the seller and increases deal certainty.

A proactive approach to divestment

Separating shared systems and contracts is not a last minute exercise. It should begin months before the sale process launches. Divestable works with business owners and group leaders to prepare non core assets for divestment, ensuring the business is positioned cleanly, professionally, and competitively for the market.

Next steps

If you are planning to divest a subsidiary or non core division, early preparation around systems, contracts, and operational separation will maximise value and reduce deal risk. Divestable can support you through each step of the process to ensure a clean, well prepared divestment.

Contact us today.