Separation Costs

One-time costs incurred to separate a carved-out business from its parent, including IT system separation, legal restructuring, and third-party service contracts.

Also known as: Dis-synergies, Carve-out costs

One-line definition

Separation costs are the price of independence — the non-recurring investments required to make the carved-out business truly standalone.

Examples

Building a standalone ERP system.
Creating HR and payroll infrastructure.
Establishing legal entities in new jurisdictions.
Recruiting functions previously provided by the parent (CFO, treasury, legal).

Deal impact

Buyers capitalise separation costs in their investment case or push for price reductions. TS quantifies these costs through detailed analysis of shared-service agreements.

Related terms

Carve-Out
A transaction where a division or business unit is separated from its parent company and sold or listed as a standalone entity.
Stranded Costs
Costs that remain at the parent company after a carve-out but which were previously allocated to the divested business, creating a cost gap.