Carve-out project components
The earlier that private equity firms start the clock, the faster they can achieve success. Regardless of the timeline, carve-out execution projects have five core components:
- Project mobilization
- Synergy and integration planning analysis
- Development of solutions and business case preparation
- Detailed design of implementation plan
Throughout the process, effective project management as well as communication and change enablement are a must. The critical elements of project management—managing risk, budget and time control, as well as scope and expectations—may overly burden internal team leaders who have other responsibilities. The PMO should be in place to provide overall transition structure and management, bring decisions and roadblocks to the steering committee, and oversee various project teams.
Education, communication and empowerment are all important transition agents to defusing pushback, and often require an outside resource that can serve as part of the transition team and as an advisory team to management, as well as assist with implementation.
To save time and effort, integrate project management as much as possible. Beyond technology, the carve-out may need some level of advisory from the chief financial officer (CFO) as well as process improvement support, financial transaction accounting, risk advisory services and other assistance.
Investing in the right outside resources
A holistic approach to carve-out execution requires a depth of capability and capacity that private equity firms may not have on staff. Operating partners with brilliant strategic insights and process improvement experience may need help sorting through the details (for example, the amount of wiring needed to put in a new phone system) and providing the necessary level of support to the internal management team, including the CFO.