Consider the criticality and complexity of the services requested, as well as the cost and timing of the conclusion or modification of third-party agreements (given the possibility of third parties having reasonable leverage and little incentive to provide short or transitional services). It is customary for ASDs to contain arbitration clauses or clauses requiring parties to take legal action in the event of major continuity of service issues, but a public servant may not want to invest the time and resources necessary to comply with these traditional dispute resolution options for anything but the most monstrous failures. Check the amount of credits or damages explicitly liquidated related to the projected costs of service failures and replacements, as direct damage can be difficult or impossible to prove. When a business is sold or a division is cut, the seller is expected to continue to provide certain services to support the buyer while expanding its business. It is important that the taker be able to extend the life of the TSA with agreed price increases for the extension conditions. Consider including escalation clauses that allow internal representatives of the service provider and recipient to resolve continuity issues by mutual agreement. Business transactions and supply chain or supply chain agents are leveraged for their knowledge and experience in service agreements, as AS AS is primarily at the centre of their concerns (for a shorter or “intermediate” period). If you are a commercial transaction lawyer or a procurement or procurement expert, it is likely that you have been asked (probably more than once) to help you conclude a Transition Agreement (ASD) as part of an A.M. transaction.
Depending on the complexity of the transitional service agreement and the critical nature of the services provided, ASDs can range from short-term back-office administration contracts, with royalty setting agreements and no formal service standards, full service agreements at defined scope, service levels, variable pricing rules and detailed data protection rules. Often, an ASD is considered an ancillary agreement and is only considered late in the transaction by people who do not have much experience in managing service arrangements. Depending on the services provided, an ASD can be a complex and sometimes controversial document. As commercial transaction lawyers, we continue to try to convince our colleagues at M-A that the involvement of competent experts (like us!) at an early stage of the process will lead to a clearer and more “thoughtful” contractual agreement allowing the parties to review and negotiate compliance and other requirements.