Securing Treasury in a Carve-Out: A Six-Month Roadmap to a Quiet, Controlled Day One

1. Why treasury sits on the front line

A carve-out forces treasury to cooperate on two fronts at once. Externally, it must work with the divesting group's finance teams and with the banks; internally, with IT and legal. Our central thesis is that the switchover date is secured by preparation that begins roughly six months ahead of the planned separation, earlier if the deal calendar allows.

Liquidity pressure arises in two ways. The new group may simply have less access to cash: because the parent stops funding it, because its change of status triggers a renegotiation of debt, or because its borrowing terms worsen. It may also struggle to move cash between its own subsidiaries once it loses the parent's cash pooling infrastructure.

“Day One is secured months in advance: the quality of the switchover reflects the quality of the upstream preparation.”

François Masquelier, Chair of EACT

2. The roadmap at a glance

D-6 months (or earlier): identify fragilities and dependencies

1. Full mapping of bank flows, accounts, systems, formats, protocols and signatories.
2. Liquidity risk assessment by entity; target post-closing cash; need for new facilities.
3. Legal review of financing, guarantees and security, and hedges.
4. Target organisation, key people, TSA scoping.

D-3 to D-1 month: secure payment means, liquidity and contracts

1. Signatory lists and powers, bank by bank.
2. Short-term funding: bridge, bilateral lines, factoring.
3. Intra-group cash circulation and treasury agreement update.
4. Cash forecast rebuilt with scenarios and stress tests.
5. TSA duration, SLA and progressive exit clauses; system clone testing.

D-1 month to D-1 week: test and lock down

1. Dry run and end-to-end tests on payments, collections and approval workflows.
2. Carve-out-specific fraud scenarios and compensating controls.

Day One and beyond: build the standalone function

1. A transition as neutral and silent as possible.
2. Day One as the first building block of an autonomous treasury.

3. Phase 1 (D-6 months): identify fragilities and dependencies

3.1 Map every treasury flow

Continuity of payments and collections is the first requirement. The starting point is a precise inventory of all banking flows, capturing for each: the bank and account, the nature of the flows, the channel used (web banking or TMS), file formats, bank connectivity protocol and authorised signatories.

For B2C businesses, we single out merchant acquiring (card acceptance) contracts: they must be examined closely so that operations can keep collecting from customers after closing, sometimes down to very practical matters such as replacing payment terminals. The mapping exercise is time-consuming and tedious but indispensable to anticipate blockages. Where time permits, it is also the natural moment to rationalise the bank relationship and the allocation of flows.

3.2 Secure group liquidity

Liquidity risk zones should be identified as early as possible, focusing on entities with long operating cycles, strong seasonality or large upcoming maturities. The target cash balance the carved-out business will hold at closing must also be factored in, both to assess liquidity risk and to decide whether new financing lines are needed.

3.3 Launch the legal review

Also from six months out, a contract review should confirm that agreements will remain operative after separation and that the new entity will have a complete, valid documentation base suited to its autonomy. Three areas deserve attention:

1. Financing: check change-of-control clauses (which a carve-out often triggers automatically) and pre-transfer conditions such as lender consent, KYC and updated powers. Where relevant, simulate covenants on a post-separation basis to avoid a breach, for example a deteriorating gearing ratio.
2. Security and guarantees: inventory existing guarantees and security and decide which must be released, transferred or re-granted. Some jurisdictions impose heavy formalities (notaries, statutory delays), so these must be anticipated to avoid gaps on switchover day.
3. Hedges: before choosing between transfer and early unwind, weigh the legal, economic, relationship and accounting consequences. Hedges can be moved by novation with a tripartite agreement between bank, former parent and carved-out entity; hedges unwound because they cannot be transferred will have IFRS 9 accounting consequences. The entity can also start negotiating its own ISDA or FBF master agreements before switchover.

3.4 Anticipate the people dimension

The human side of the carve-out should not be underestimated. Early on, the team needs to know who the key people are, who will join the new entity, who stays with the seller, and which functions must be reinforced. Defining the target organisation often reveals needs for temporary support (internal reinforcement, external assistance, or services under the Transition Services Agreement, the TSA) to absorb the extra project workload.

This is also the moment to scope the TSA: identify the perimeter and functionality the standalone group will need, both for business as usual and for planned transformation. For example, if the bank relationship is to be rationalised, account openings and closures in the system must be anticipated within the TSA services. Change is a good time to challenge legacy set-ups in bank connectivity and payment approval workflows, often with savings on user numbers and billed services.

4. Phase 2 (D-3 to D-1 month): secure payments, liquidity and contracts

As separation nears, the work shifts from diagnosis to concrete, operational securing of processes for Day One.

4.1 Bank structure and powers

Using the flow map, anticipate changes to signatory lists: every account remaining with the carved-out entity must keep enough signatories. Start early, since adding or removing signatories can require jurisdiction-specific documentation and lengthy exchanges with banks. If the target organisation cannot supply enough signatories or maintain adequate payment-process security, centralising signing authority, temporarily or permanently, is an option.

4.2 Short-term funding and intra-group cash

The last 100 days are the window to lock in short-term funding. Once liquidity needs are quantified, the new group must be able to meet them, whether via a bridge facility, bilateral lines or receivables factoring to fund working capital. For cash circulation between entities, a fresh analysis of local regimes and an updated treasury (cash pooling) agreement should prevent any break in access to intra-group liquidity.

4.3 Cash forecasting and stress testing

The cash forecast is a key tool for the group's robustness from Day One. An existing tool will likely need revising to reflect new cash items and changes in operational flows, both intra-group and external. Carve-out-specific risks must be built in, notably temporarily trapped cash and uncertainty around the timing of TSA invoicing, and scenarios and stress tests are recommended to validate cash generation and prepare trade-offs.

4.4 Spread a cash culture

Because of the liquidity strain it can create, a carve-out is an opportunity to raise cash awareness among operational managers. We recommend starting with basic levers: customer and supplier payment terms, a cash budget on capex, and tighter working-capital monitoring.

4.5 Negotiate the TSA and test cloned systems

With the perimeter defined, negotiations should cover not only TSA duration but also the Service Level Agreement (SLA), with progressive exit clauses to avoid a cliff-edge effect. The clearer the drafting, the smoother life after switchover. Where information systems are cloned, a series of tests should be scheduled one to two months before closing.

5. Phase 3 (D-1 month to D-1 week): test and lock down

5.1 Test in real conditions

Cash flows are the priority. The team should run a dry run and end-to-end tests covering payments, collections and approval workflows, at the latest in the month before carve-out, so there is time to fix configuration if blockages appear.

5.2 Guard against fraud

Periods of change attract fraud attempts. More counterparties, time pressure and unstable procedures make the organisation more exposed, so the first step is to understand typical carve-out fraud scenarios. Compensating controls should then be activated to cover temporary weaknesses. Good practices include:

1. systematic dual validation of payments;
2. a temporary restriction on out-of-process changes to beneficiary bank details;
3. a whitelist of approved payment beneficiaries;
4. immediate deactivation of all system access made obsolete by the reorganisation.

6. What is key for a successful carve-out?

A successful carve-out is one where the transition is as neutral and silent as possible, which only rigorous preparation months ahead can deliver. Beyond the switchover, the real challenge for treasury teams is building a genuinely autonomous function: Day One is not an end in itself but its first building block.

7. Additional points to contemplate

We wanted to present a solid, practitioner-oriented checklist. From our advisory experience with European multinationals, we would add the following points to any carve-out treasury plan:

1. Bank onboarding and LEI: KYC onboarding of a newly incorporated entity routinely takes 6 to 12 weeks per bank; a new LEI is needed for EMIR reporting of derivatives and may be required by banks from Day One.
2. Hedge accounting: novating or unwinding hedges ends existing hedge relationships under IFRS 9; plan re-designation and documentation on the new entity's books so that P&L volatility is not a Day One surprise.
3. Payee verification: in the euro area, Verification of Payee under the Instant Payments Regulation applies since October 2025; changes of account names and holders during a carve-out can trigger "no match" results that disrupt collections if customers are not informed.
4. Transfer pricing: rebuilding a cash pool means revisiting intra-group loan terms and arm's-length pricing under OECD transfer pricing guidance on financial transactions.
5. TMS licensing: confirm that TMS and banking-portal licences can be cloned or transferred; vendors often require new contracts for a new legal entity.
6. Governance: insist on treasury-specific TSA exit milestones and a named owner on each side; TSA overruns are a frequent hidden cost.

8. Final key takeaways for treasurers

1. Start at D-6 months at the latest: the flow and account map is the foundation of everything else.
2. Quantify target closing cash and entity-level liquidity risk early; decide on new facilities before the last 100 days.
3. Run the legal review across financing, security and hedges in parallel, with change-of-control and covenant tests first.
4. Treat signatory changes and bank KYC as critical-path items.
5. Rebuild the cash forecast with carve-out-specific risks and stress tests.
6. Negotiate TSA and SLA with progressive exit, not a cliff edge.
7. Test end-to-end at least a month before Day One and tighten anti-fraud controls throughout the transition.

François Masquelier

CEO of Simply Treasury, Chairman of ATEL, Chair of EACT