The contract under which a seller keeps running services (IT, payroll, finance operations) for a business it has just sold, while the buyer builds or connects its own. The deal after the deal, priced when leverage has already changed hands.
On completion day the carved-out business still runs on the seller's systems. The TSA is what keeps the lights on, and its scope, price and exit terms determine how long the buyer remains a tenant in the seller's house.
Last reviewed 3 July 2026 · Free and ungated
Carve-outs look different from the seller's side. Operators who have run them from both can pressure-test the separation plan while it can still change the price.
Review this before committingA transition services agreement obliges the seller of a business, typically in a carve-out, to keep providing defined services to that business for a period after completion: IT platforms, payroll, accounting, procurement, sometimes whole functions. Each service has a scope, a charge and a term, with exit either at fixed dates or as the buyer migrates off.
The TSA is where separation reality gets priced. A buyer who assumed twelve months of transition and needs thirty is paying TSA charges, delaying synergies and deferring integration all at once, which can move the effective purchase price materially. The incentives run against the buyer throughout: the seller wants the arrangement short and profitable, staffs it accordingly, and has little reason to improve services it is exiting. Every month on the TSA is a month the acquired business is operated by an organisation contractually finished with it.