Carve-out: Securing Cash Flow to Ensure a Successful Transition to Independence
During a carve-out, securing cash flow is a major challenge to enable the spun-off entity to become self-sufficient while ensuring the continuity of its operations. Preparation should ideally begin six months before the separation date, by identifying vulnerabilities and dependencies.
A first step is to map out cash flows, including bank accounts, payment methods, banking communication tools, and contracts. This analysis makes it possible to anticipate contract transfers and ensure the continuity of cash receipts and payments. It is also essential to ensure the new group’s liquidity and identify any risks related to financing needs.
The carve-out also requires a thorough legal review, focusing in particular on financing, covenants, guarantees, and hedges. Anticipating HR issues and identifying key resources also helps define the target organization and determine any potential needs for additional staff or a Transition Services Agreement (TSA).
As the separation approaches—between 3 months and 1 month before the effective date—teams must secure payment methods, liquidity, and the contractual framework. The 100-day period leading up to the carve-out is also a key time to secure short-term financing and update cash flow forecasts.
Finally, over the past month, the systems must be tested under real-world conditions: dry runs, end-to-end tests, verification of payments and collections, as well as enhanced controls to mitigate the risk of fraud. The TSA negotiations and system testing must be finalized before the switchover.
Much more than a simple separation process, a carve-out is a comprehensive effort to build an autonomous treasury function, the success of which depends on rigorous preparation, anticipating risks, and ensuring the security of operations from day one.
ABOUT THE AUTHORS
Brice Euvé is a Consulting Partner at Emerson Audit & Conseil. With over 25 years of experience in auditing and consulting, and a degree in accounting, he supports the transformation of finance departments, particularly treasury departments, in their projects to develop TMS and improve the efficiency of treasury processes and treasury management.
Cécile Dobras is an Associate Director. She has over 10 years of experience in corporate finance, particularly in issues related to market risk management, cash management, and financing. Her role is to strengthen the firm's relationship with finance departments in the Auvergne-Rhône-Alpes region.
ABOUT EMERSON AUDIT & CONSULTING
With a team of 220 people, Emerson Audit & Consulting is dedicated to supporting finance departments in the following areas:
- Their operational needs: expanding the team across all functions: Accounting, Consolidation, Management Accounting, Internal Control and Audit, and Treasury
- Their transformation/digitalization projects: organization, optimization, and implementation of tools, management of CSR/CSRD projects.
During a carve-out, securing cash flow is a major challenge to enable the spun-off entity to become self-sufficient while ensuring the continuity of its operations. Preparation should ideally begin six months before the separation date, by identifying vulnerabilities and dependencies.
A first step is to map out cash flows, including bank accounts, payment methods, banking communication tools, and contracts. This analysis makes it possible to anticipate contract transfers and ensure the continuity of cash receipts and payments. It is also essential to ensure the new group’s liquidity and identify any risks related to financing needs.
The carve-out also requires a thorough legal review, focusing in particular on financing, covenants, guarantees, and hedges. Anticipating HR issues and identifying key resources also helps define the target organization and determine any potential needs for additional staff or a Transition Services Agreement (TSA).
As the separation approaches—between 3 months and 1 month before the effective date—teams must secure payment methods, liquidity, and the contractual framework. The 100-day period leading up to the carve-out is also a key time to secure short-term financing and update cash flow forecasts.
Finally, over the past month, the systems must be tested under real-world conditions: dry runs, end-to-end tests, verification of payments and collections, as well as enhanced controls to mitigate the risk of fraud. The TSA negotiations and system testing must be finalized before the switchover.
Much more than a simple separation process, a carve-out is a comprehensive effort to build an autonomous treasury function, the success of which depends on rigorous preparation, anticipating risks, and ensuring the security of operations from day one.
ABOUT THE AUTHORS
Brice Euvé is a Consulting Partner at Emerson Audit & Conseil. With over 25 years of experience in auditing and consulting, and a degree in accounting, he supports the transformation of finance departments, particularly treasury departments, in their projects to develop TMS and improve the efficiency of treasury processes and treasury management.
Cécile Dobras is an Associate Director. She has over 10 years of experience in corporate finance, particularly in issues related to market risk management, cash management, and financing. Her role is to strengthen the firm's relationship with finance departments in the Auvergne-Rhône-Alpes region.
ABOUT EMERSON AUDIT & CONSULTING
With a team of 220 people, Emerson Audit & Consulting is dedicated to supporting finance departments in the following areas:
- Their operational needs: expanding the team across all functions: Accounting, Consolidation, Management Accounting, Internal Control and Audit, and Treasury
- Their transformation/digitalization projects: organization, optimization, and implementation of tools, management of CSR/CSRD projects.
During a carve-out, securing cash flow is a major challenge to enable the spun-off entity to become self-sufficient while ensuring the continuity of its operations. Preparation should ideally begin six months before the separation date, by identifying vulnerabilities and dependencies.
A first step is to map out cash flows, including bank accounts, payment methods, banking communication tools, and contracts. This analysis makes it possible to anticipate contract transfers and ensure the continuity of cash receipts and payments. It is also essential to ensure the new group’s liquidity and identify any risks related to financing needs.
The carve-out also requires a thorough legal review, focusing in particular on financing, covenants, guarantees, and hedges. Anticipating HR issues and identifying key resources also helps define the target organization and determine any potential needs for additional staff or a Transition Services Agreement (TSA).
As the separation approaches—between 3 months and 1 month before the effective date—teams must secure payment methods, liquidity, and the contractual framework. The 100-day period leading up to the carve-out is also a key time to secure short-term financing and update cash flow forecasts.
Finally, over the past month, the systems must be tested under real-world conditions: dry runs, end-to-end tests, verification of payments and collections, as well as enhanced controls to mitigate the risk of fraud. The TSA negotiations and system testing must be finalized before the switchover.
Much more than a simple separation process, a carve-out is a comprehensive effort to build an autonomous treasury function, the success of which depends on rigorous preparation, anticipating risks, and ensuring the security of operations from day one.
ABOUT THE AUTHORS
Brice Euvé is a Consulting Partner at Emerson Audit & Conseil. With over 25 years of experience in auditing and consulting, and a degree in accounting, he supports the transformation of finance departments, particularly treasury departments, in their projects to develop TMS and improve the efficiency of treasury processes and treasury management.
Cécile Dobras is an Associate Director. She has over 10 years of experience in corporate finance, particularly in issues related to market risk management, cash management, and financing. Her role is to strengthen the firm's relationship with finance departments in the Auvergne-Rhône-Alpes region.
ABOUT EMERSON AUDIT & CONSULTING
With a team of 220 people, Emerson Audit & Consulting is dedicated to supporting finance departments in the following areas:
- Their operational needs: expanding the team across all functions: Accounting, Consolidation, Management Accounting, Internal Control and Audit, and Treasury
- Their transformation/digitalization projects: organization, optimization, and implementation of tools, management of CSR/CSRD projects.