When a business is sold, it rarely separates cleanly on completion day. The buyer often needs the seller to keep providing certain services for a while, such as IT systems, payroll, finance, or use of a brand, until the acquired business can stand on its own. A transitional services agreement, or TSA, is the contract that governs that handover period.
A TSA defines which services the seller will continue to provide after closing, for how long, at what price, and to what standard. Typical services include access to IT and software systems, finance and payroll support, HR administration, and continued use of trademarks or domains during a rebranding period. The point is continuity: the acquired business keeps running while the buyer builds or migrates to its own arrangements.
The detail decides whether a TSA is smooth or contentious. Each service needs a clear scope and a service level, so expectations are defined rather than assumed. Duration and any extension options need to be realistic, because migrations usually take longer than planned. Pricing should be transparent, often at cost or cost-plus. And exit needs to be planned from the start, with the data, accounts and any licensed IP cleanly handed over or wound down at the end. Where the brand is used during transition, the IP terms should mirror a controlled trademark licence with quality control and a firm end date.
A TSA is part of the deal documentation in our commercial contracts and transactions and corporate funding work. It follows on from the deal itself, covered in M&A deal structures and the preparation in due diligence and the data room, and it borrows the framework-plus-service-schedule logic of a master services agreement. The document is drafted and reviewed through our Contract Studio technology.
Because a business rarely separates cleanly on completion. A TSA keeps essential services running, so the acquired business operates without interruption while the buyer migrates to its own systems and arrangements.
Long enough to complete the migration realistically, which is often longer than first expected. Build in a defined term with sensible extension options and a clear exit, rather than an open-ended arrangement.
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