Maintaining a TSA office on the buyer`s side is an effective way to manage TSA agreements with the seller. The benefits of this plan include that the structuring of performance criteria should also include the potential effects of non-compliance by third parties participating in the provision of the TSA service. Determine in advance whether third-party agreements and licenses with vendors and service providers need to be changed. In some countries, it is not possible to maintain different plans for different employees within the same unit. As a result, the buyer may be asked to provide some sort of “benefit nation” status and to provide all employees with the best of both benefit packages. Obviously, this can change the expected cost of the transaction. Organizations use ASDs when the business or part of the business is sold to another company. An ASD outlines a plan for the sales company to hand over the controls to the buyer. It generally covers critical services such as human resources, information technology, accounting and finance, as well as all relevant infrastructure. ASDs are valid for a predetermined period, usually about six months. Like buyers, TSA sellers pose challenges because they contractually bind the seller to the buyer beyond the closing date of the transaction. During the transition process, vendors must use internal staff, salary and accounting resources for existing and new employees, even after the sale date.
The negotiation phase of the TSA is crucial. A poorly defined ASD results in disputes between the buyer and the seller over the extent of the service. 2 Second, there may be benefits that must arise from contractual commitments in the sales contract. In this regard, a buyer must be careful about what he is required to offer. As noted above, in some cases it may not be possible to offer transferred employees the same benefits as with the seller. In other cases, it may not be desirable to emulate some benefits (i.e., it is not economically sound to replicate certain plans, especially in countries where the acquired labour force is relatively small). From the buyer`s point of view, the sales contract would ideally limit the obligation of replication only to the extent prescribed by law, with the margin of appreciation for un mandated services left to the purchaser. If this cannot be negotiated, an alternative is to limit the obligation of replication to the extent set by the buyer, as defined by the buyer.
If this is not an acceptable alternative, the agreement should at least give the parties some flexibility to accept changes to service offerings (in all cases subject to applicable law). From the seller`s point of view, a degree of flexibility should be acceptable, provided that the seller is properly protected in the event of an infringement. When business teams negotiate the terms and conditions of the agreement, promises of transition services are often made without knowing what can and cannot be provided. Often, these issues are only revealed when the agreement is signed and the parties come to a conclusion. This may result in delayed closures in some countries, which may result in additional costs for the parties. Depending on the country, the seller is responsible for not providing the prescribed benefits.