Transition Services Agreement

by Practical Law Corporate & Securities

A Standard Document providing a model Transition Services Agreement for use in M&A transactions, particularly in asset sales and carve-out deals. This Document establishes a formal framework for a seller to provide essential ongoing services to a buyer after the closing of a sale, ensuring operational continuity and a smooth post-closing integration. It outlines critical terms governing the provision of functions such as IT support, human resources, and accounting services. Key provisions in this template detail the scope and duration of the services, the standard of care for performance, and the compensation and payment structure. This agreement also addresses crucial risk allocation matters, including confidentiality obligations, limitations on the seller's liability, and indemnification procedures. Parties can use this template to negotiate service extension or early termination rights, helping to facilitate an orderly transition of the business from the seller to the buyer while managing post-closing responsibilities and legal exposure.