Carve-Out ERP Separation: Getting Off the Seller’s Systems Before the TSA Runs Out

The deal closed months ago. The new logo is on the building, the payroll has moved, the email domain has changed. And every order your business takes is still entered into the seller’s ERP, on the seller’s servers, supported by the seller’s IT team, under a transitional service agreement that ends on a date someone negotiated before you were involved. Each month on the TSA costs money. Each change you ask for needs the seller’s approval. And the seller’s people have no reason to put you first.

Carve-out ERP separation is usually the longest and riskiest part of standing a business up on its own, and it is where most TSA extensions come from. Carve-outs are not rare: in a survey AURELIUS ran in late 2025 among 140 senior advisers, private equity and corporate professionals, 80% expected carve-out activity to increase in 2026. Below is why the ERP is always last, the three realistic ways out, and a plan for leaving on time.

Why the ERP is always the last service to exit

Most TSA services can be replaced one at a time. Payroll moves to a provider, email moves to a new tenant, laptops are reimaged. The ERP is different because almost everything else depends on it: the finance close, invoicing, purchasing, stock, and increasingly the Peppol e-invoicing flow that has to carry your own enterprise number instead of the seller’s. It cannot move until the things around it are ready, and nothing around it is fully independent until it moves. L.E.K. puts it simply in its guidance on TSAs: IT often sets the critical path for everything else.

There is also a data problem that has nothing to do with software. In the seller’s ERP your business was never a separate thing. Customers are shared with other divisions. Items are coded to the group’s catalogue. Suppliers were negotiated centrally. Cost centres, intercompany flows and approval chains were designed for a group you are no longer part of. Before you can move your data, you have to decide which data is yours.

Three routes to carve-out ERP separation

Clone and strip

Copy the seller’s ERP environment, delete everything that is not yours, and run the copy yourself. It is the fastest option on paper and the one users notice least, because screens and processes stay the same. The costs are hidden. You need the seller’s agreement and usually a licence transfer from the vendor. Deleting other divisions’ data cleanly is harder than it sounds, and legally sensitive. And you inherit a system sized, customised and configured for a much larger organisation, which you now have to pay for and maintain alone.

Clean build

Implement a new ERP, sized for the business you actually are, and migrate only the data you need. It takes longer and asks more of your people, but you leave the TSA with a system that fits and no inheritance from the seller. For a mid-sized carve-out this is often the better long-term answer, and it does not have to take a year. We have delivered full ERP implementations in 12 weeks when the scope was clear and the business was committed, as in our work at Waterlogic Hungary after an acquisition.

Move onto the buyer’s platform

If the buyer is a trade buyer or a platform in a buy-and-build strategy, the carved-out business can move onto the buyer’s existing ERP. This is really an integration project rather than a separation, and the M&A integration checklist applies. It works well when the buyer’s processes fit. It goes badly when they do not, because the carved-out team loses its old system and its old ways of working at the same time.

A TSA exit plan that holds

Whatever route you choose, the same sequence applies. Work backwards from the TSA end date, and assume you will not get an extension on good terms.

1. First month: read the TSA itself. List every IT service it covers, its end date, its extension terms and its price. Check that data extraction and the seller’s help with migration are explicitly included; if they are not, negotiate now.
2. First two months: decide which data is yours. Agree with the seller which customers, suppliers, items and open transactions belong to the carved-out business, and who decides the borderline cases.
3. Months two to three: choose the route (clone, clean build, buyer’s platform) and the target system, based on the business you will be, not the one you were.
4. Months three to four: map your own processes. For the first time, write down how order-to-cash, procure-to-pay and the month-end close work in your business alone, without the group’s shared services behind them.
5. Throughout: set up everything outside the ERP that the ERP depends on. Your own bank accounts, VAT registration, Peppol identifier, and connections to logistics providers and customers.
6. Final third of the TSA: run at least two test migrations with real data and one full rehearsal of the cutover, including the first close on the new system.
7. Cutover: pick a date that leaves a full month of TSA as a safety net. A go-live in the last week of the TSA leaves nowhere to go if something fails.

L.E.K. makes a point about TSA timelines that we see in practice: when the exit schedule is set conservatively, the work tends to expand to fill it. A tight but realistic plan, tracked monthly with the seller, does more to prevent an extension than a generous deadline.

The people problem nobody puts in the TSA

The knowledge you need to separate the ERP often sits with the seller’s staff: the key user in shared services who knows why a pricing rule exists, the application manager who built the interface to the warehouse. They are still employed by the seller, they have other priorities, and some of them will leave during your TSA. Name the people you depend on, agree their availability with the seller, and start writing down what they know in the first month rather than the last.

On your side, the carved-out business usually has no one whose job it is to own the ERP. The group did that. Someone has to own it from the first day of the separation project, not from go-live. If you do not have that person yet, an interim application manager or project manager can cover the gap and train your own team to take over, which is what we did at Culligan Austria when a key role fell away.

The bottom line

A carve-out is not finished when the deal closes. It is finished when the business runs its own systems, and the ERP is almost always the last of those. The companies that leave their TSA on time decide early which data is theirs, choose a route that fits the business they want to become, and build their plan backwards from the TSA end date with a month to spare. The ones that do not end up negotiating an extension with a seller who has no reason to be generous.

The M&A Integration Checklist

How to Run a 12-Week ERP Implementation

Case study: Waterlogic Hungary, a legal-deadline ERP in 12 weeks

Case study: Culligan Austria, interim application management

Sources

AURELIUS: carve-outs set to continue to increase in 2026 (survey)

L.E.K. Consulting: transition service agreements, the art of building a bridge to a new business