KPMG has identified the most frequently encountered pitfalls that drive approximately 80 percent of the issues associated with executing a carve-out. These challenges fall into six categories: operational, people and communications, setting up a legal entity, joint planning, regulatory, and stranded costs related to transition service agreements.

By establishing clear separation guiding principles, sellers can begin to mitigate the pitfalls before they arise, and develop a decision-making matrix that empowers teams and functional leaders. These principles can help to minimize the volume of issues escalated to the carve-out’s Separation Management Office and executive steering committee.

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