Tuesday, September 28, 2004

Outsourcing: Transitional Service Agreements

NEWS.com.au reports companies that centralise IT services with an outsourcer or a shared services group need to design deals that can be broken up if part of the company is sold.

Minter Ellison partner Keith Robinson says the increasingly popular shared services model could make it difficult and expensive to break off elements of a company in a merger or acquisition, unless the services deal is structured so it can be separated.

Robinson says corporates need to "think ahead" when negotiating services agreements, and structure such agreements so temporary sub-licences can be developed to deal with sales of parts of the business. Lawyers call these deals "transitional service agreements".

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