Bridging the talent gap: how to successfully navigate the transition from ParentCo to NewCo

Any carve-out transaction will bring with it the critical challenge of standing up the right resources to lead on the front foot when separation is complete and Day 1 dawns.

In a recent engagement, we encountered a familiar scenario where a significant proportion of the talent within the entity to be carved out would remain with the parent company. This meant that we would be lacking in some key positions, while the overall organisational design of the new entity would also need to be reimagined to create a strong central headquarters for operations.

Three important stages were required to deliver a smooth talent transition:

Knowledge transfer

While not every individual may have been transferred, there were a number of areas where specific business insight and expertise needed to be shared with the new business ahead of separation. It was vital to quickly identify the specific nature of the knowledge to be collected, and the individuals best placed to provide this download, using the time prior to separation to gather the intellectual capital that aligned with the new entity’s needs.

Talent identification for today – and tomorrow

A Target Operating Model (TOM), developed at pace before separation, provided the blueprint for the new entity’s resource make-up. With this in hand, hiring for vacated positions (due to parentco resource retention) and other additional roles to fit the new business’s requirements could begin.

In this case, key roles included Head of IT, systems integrators, MDs for regional entities, and senior operations and finance roles. By also mapping out the target end state for the organisation, immediate hiring needs and appointments could be evaluated and filled with that in mind, creating the optimal environment for a smooth evolution of the business structure over time.

Strategic use of TSAs

Transitional Service Agreements (TSAs) are a necessary part of any business separation, providing interim support for carved out entities from their parent company as new processes and systems are stood up.

While the intention should always be to limit the length – and associated cost – of TSAs, particularly in the case of IT support or other business-critical services, these should be practically and pragmatically constructed to leverage existing business expertise while new solutions are rolled out and new hires embedded to take the reins post-separation.