In 2024 we sold our tool hire business, about twenty branches and two hundred and fifty people, to a specialist hire company. It ran on our systems: our order and finance platform, our email, our network and our service desk. The buyer had no way to take all of that on the day the sale completed, so the deal included a transitional services agreement in which we would keep running everything for six months while they moved the division onto their own systems.
I saw the agreement two weeks before signing. The lawyers had written it from a template. It listed the services, set a monthly fee based on our 2023 costs, and allowed the buyer to extend it for further three month periods on notice. It did not say what would happen if the buyer's own project slipped, and it did not allow the price to change.
Their project slipped. It is now twenty six months since completion and we still run their order processing, their payroll and their email. The fee has stayed where it was set, while our licence costs rose by about a fifth. Two of my engineers spend roughly a third of their time on a company we no longer own.
The cost that hurts most is not the fee. Their branches sit in the same instance of our order system, so our own upgrade, planned for last year, has been postponed twice because it would change their system too. Any security incident on their side would happen inside our network. And every request they make is one my team has to turn down or fulfil for a customer we are not allowed to treat as a customer.
The sale itself was right for the business. What was missing was anyone in the deal team who knew that separating systems takes longer than separating ownership.
IT now has a seat on any sale of part of the business from the first draft. A transitional agreement must have an end date that cannot be extended without a director's approval, a price that rises with each extension, and a named exit plan from the buyer before signing. We are negotiating those terms into this one as part of its next extension.
When the business sells part of itself, IT is usually the last part to leave, and the agreement should be written on that assumption.
– Serguey Shinder
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