M&A·Oct 1, 2026·6 min read

Carve-outs start with an application map. Most programs don't have one.

A divested business has to stand up its own systems while the parent keeps the lights on under a transition agreement. The first deliverable of every separation is an inventory of what runs where. ARC builds it from the code.

MKMichael Kofman · Founder, ARC

The clock is the budget

In a carve-out the seller keeps running IT, HR and finance for the divested entity under a Transition Services Agreement. Those agreements commonly run 6 to 24 months, and extensions usually come with a price escalator. Every month spent working out which systems the new company depends on is a month paid for at TSA rates.

Separation itself is Day 2 work: extracting the ERP, migrating identity, splitting the data. But it has to be planned during Day 1, when the people who know the systems are busy keeping them running.

Why the usual inventory doesn't hold up

Most organizations have an application list. It was built from surveys and CMDB exports, it is a year out of date, and it says nothing about what each application actually does or which business rules live inside it. Two systems with different names can do the same job. One system with one name can quietly serve three business units.

The question isn't "what applications do we have". It's "which of them does the new company need on Day 2, and what's tangled up inside them".

What ARC does

  • Inventory. Every application in one portfolio view: owner, region, tier, technology, and the business capabilities it supports. Fields ARC derived from the code say so, and manual edits survive every re-sync.
  • Discovery where it matters. For the applications on the critical path, ARC reads the code and the database into capabilities, business rules, integrations and data, each cited to its source.
  • Overlap and dependencies. Systems placed on the same capability map show where the divested business shares a platform with the parent, and which integrations cross the line.
  • A plan the steering group can sign. The target architecture and build order, written for the integration office and the board as well as for engineers.

What you get

Week 1The portfolio loaded into Inventory, tiered, with owners confirmed.
Weeks 2 to 3Discovery on the shared and critical systems: what they do, who uses them, what they connect to.
ThenA keep, split, replicate or retire call per application, with the evidence behind each one.

Timelines depend on access to code and people; we confirm them on the scoping call.

Planning a separation?

Bring the deal timeline and a list of the systems in scope. We'll tell you what ARC can map before Day 1.