Transitional Services Agreement (TSA)
Definition
A transitional services agreement (TSA) is a contract under which a seller continues to provide certain services to a business after it has been sold, for a limited period and usually for a fee, until the buyer can operate the business independently. TSAs are common when a business is carved out of a larger group and relies on shared functions — IT systems, payroll, finance, procurement or premises — that do not transfer automatically on completion. The agreement specifies which services continue, for how long, to what standard and at what cost, giving the buyer time to stand up its own capabilities without interrupting the business. For the buyer a well-scoped TSA de-risks the transition; for the seller it needs a clear end date so it is not left supporting a business it no longer owns. TSAs are a normal feature of carve-out acquisitions in the UK and internationally.
Complementary Terms
Concepts that frequently appear alongside Transitional Services Agreement (TSA) in practice.
A 100-day plan is the structured programme an acquirer follows in the first roughly three months after completing an acquisition to stabilise the business and begin realising the value it paid for. It sequences the priorities: securing the key people and customers, communicating with staff, connecting essential systems and controls, and starting on the synergies that justified the deal — without disrupting what already works.
A change of control occurs when ownership of a company passes to a new party, as it does on an acquisition. The term matters in M&A because many of a business's contracts contain change-of-control clauses that are triggered by the sale: a customer or supplier contract, a lease, a licence or a loan may allow the other party to renegotiate or terminate if the company changes hands.
The accumulated knowledge, processes, systems, and culture that enable a firm to operate effectively. Organisational capital includes management practices, internal processes, proprietary methodologies, quality systems, and the institutional knowledge that persists beyond individual employees.
Further Reading
How to Buy a Business: Grow by Acquisition
The buy-side hub: finding, diligencing, financing and integrating an acquisition.
Read more →Related FAQ
A 100-day plan is the structured programme an acquirer follows in the first roughly three months after completion to stabilise the business, retain its people and customers, and begin realising the synergies that justified the deal.
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