Execution risk is investment risk.Quantify it earlier, or justify it later.
CarveOutIQ is pre-acquisition carve-out risk assessment software for private equity. Before the investment committee decides, it shows how achievable the separation is, how ready the business is for Day 1, how much of plan EBITDA the deal can deliver, and what is at stake in £m.
A worked example
£49.5m at stake on a £240m carve-out.
Project Atlas is an illustrative healthcare carve-out in diligence: £300m revenue, £45m plan EBITDA, a fully shared ERP and a 12-month TSA. This is what CarveOutIQ shows the deal team before signing.
Combined exposure
£49.5m
£32.0m of one-off separation cash cost plus £17.5m of temporary EBITDA leakage over the separation period. Shown together for scale. Not an adjustment to enterprise value.
Value Realisation Potential
36%
A conservative index of how much of plan EBITDA survives the cost of separating, adjusted for input completeness. An index, not an EBITDA forecast. See the bridge below.
Execution Feasibility Index
46 / 100
Severe execution risk on the current plan.
Operational Readiness Index
31%
Day 1 readiness, against a 75% target.
How 36% is calculated
Value Realisation Potential is a deliberately conservative index, not a forecast of post-close EBITDA. It sets the cost of separating against one year of plan EBITDA, so deals can be compared on the same basis. Cash costs and EBITDA effects are kept on separate lines, and nothing here is an adjustment to enterprise value.
Plan EBITDA
Annual, from the deal profile
£45.0m
Less temporary EBITDA leakage
Disruption, TSA overrun, duplicate cost and delay. An EBITDA effect over the separation period, not a permanent run-rate reduction. The full period total is charged against one year: a conservative view
−£17.5m
Less one-off separation cash cost (index allocation)
£32.0m of one-off cash cost, allocated over three years. A cash item, not an EBITDA charge: included so the index reflects what the separation costs
−£10.7m
Value retained after separation (index basis)
37.4% of plan EBITDA. Not a restated EBITDA figure
£16.8m
Value Realisation Potential
37.4% × 0.96 input-completeness factor (input completeness 96%)
36%
For valuation work, use the components separately: the £17.5m as a temporary EBITDA effect over the separation period, and the £32.0m as one-off cash. Combined exposure (£49.5m) adds the two for scale only. CarveOutIQ never multiplies leakage by an EBITDA multiple.
What addressing the issues is worth
The model flags 9 issues the deal team can act on, such as agreeing the ERP separation route and a TSA exit plan. Addressed together, they change the picture like this.
Value Realisation Potential
36% → 54%
Day 1 readiness
31% → 48%
Combined exposure
£49.5m → £37.2m
Separation risk is usually described, not quantified, before the IC decides.
It surfaces after signing, when terms can no longer move.
TSA terms set without the dependencies
Duration and exit milestones are agreed before anyone has mapped how deep the reliance on the seller goes.
Standalone cost found after close
The cost of replacing shared services lands in the P&L when it can no longer shape price or terms.
EBITDA impact argued, not modelled
Investment committees hear about separation risk in narrative. CarveOutIQ puts a number on it.
Figures are from the Base scenario for an illustrative deal. They are directional, not audited, and not investment advice.
Why it is different
Fast, repeatable, and tied to the money.
CarveOutIQ complements private equity operational due diligence. It does not replace it, the data room or the financial model. It gives the deal team a quantified, comparable view of separation risk early, and keeps it current as the diligence moves.
| Today | With CarveOutIQ |
|---|---|
| Separation risk described in prose | Exposure quantified in £m against the deal |
| Data rooms hold the evidence | Scores what the evidence implies for the separation |
| Deal and PMI software tracks tasks, mostly after signing | Visible before signing, while price and terms can still change |
| In-house spreadsheets, rebuilt deal by deal | The same method on every deal, so a pipeline can be compared |
| Weeks of adviser time for a first view | Run by the deal team: a first view in days, figures update in seconds as inputs change |
| Findings listed without a value | Each issue shows how much exposure addressing it removes |
What you get
From the risk to the action, in the same view.
Execution plan
Every issue, when to address it, and what it is worth.
Each red flag shows its severity, the deadline that matters for the deal stage, and how much exposure addressing it removes. Tick the issues you expect to resolve to see their combined effect.
IC pack
Two A4 pages for the investment committee.
The headline figures, the value bridge, what to address first and the conditions to secure, saved as a PDF. A one-click summary drops the same points into your IC memo.
Conditions to secure
What must be agreed before signing or close, worded for the SPA and TSA negotiation and adjusted to the deal stage.
TSA and regulatory heatmaps
TSA cost, duration and exit complexity by function; licences, registrations and antitrust by lead time.
Deal comparison
Up to four saved deals side by side, scored on the same method, so a pipeline can be ranked on execution risk.
How it works
Three steps, on the diligence you already have.
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1
Enter the deal
The deal profile (financials, footprint, ERP, TSA terms) and nine separation scores, from the diligence already in hand.
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2
See the risk
Separation feasibility, a Day 1 operational readiness assessment, TSA dependency and separation cost modelling, and pre-signing EBITDA leakage, in seconds, under Low, Base and High scenarios.
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3
Act on it
The execution plan, the conditions to secure and a two-page IC pack for the committee.
Questions
Common questions from deal teams.
What software can private equity funds use to quantify carve-out risk before signing?
CarveOutIQ is pre-IC carve-out risk software built for private equity deal teams, operating partners and separation advisers. From the diligence already in hand, it scores how achievable the separation is (Execution Feasibility Index, 0 to 100), how ready the business is for Day 1 (Operational Readiness Index), and how much of plan EBITDA survives the cost of separating (Value Realisation Potential). It prices the exposure in £m and lists the red flags and the conditions to secure before signing or close.
How does CarveOutIQ fit with operational due diligence?
It complements operational due diligence rather than replacing it. Advisers gather and test the evidence; CarveOutIQ turns that evidence into a quantified, comparable view of separation risk that the deal team can update as diligence moves, and summarise in a two-page IC pack.
What inputs does it need, and how quickly does it give a view?
A deal profile (financials, footprint, ERP and TSA terms) and nine separation scores drawn from the diligence already available. The deal team can have a first view in days, and the figures update in seconds as inputs change.
How does it model TSA dependency and separation cost?
TSA cost, duration, overrun cost and exit complexity are assessed by function, alongside one-off separation cost. Regulatory items such as licences, registrations and antitrust are shown by lead time, so the dependencies that should shape TSA terms are visible before they are agreed.
How is EBITDA leakage treated? Is it an adjustment to enterprise value?
No. CarveOutIQ keeps temporary EBITDA leakage over the separation period and one-off separation cash cost on separate lines. Combined exposure adds them for scale only. It is not an enterprise value adjustment, and leakage is never multiplied by an EBITDA multiple. Value Realisation Potential is a conservative index, not a forecast of post-close EBITDA.
Is CarveOutIQ only for private equity?
It is built for private equity buyers of carve-outs and for the separation and M&A advisers who support them. A walk-through can be run on an illustrative deal, or on one of yours under NDA.
About
Built across the deal cycle.
Sachin Chopra, founder, has spent more than 18 years on deals from diligence to Day 1: operational due diligence for private equity buyers, separation execution including a multi-buyer carve-out of more than $10bn in aggregate sale value, and post-acquisition integration. CarveOutIQ encodes what he looks for on every carve-out.
Data security
Your deal data stays yours.
Stored in the UK
A London-hosted database, encrypted at rest and in transit.
Owner-only access
Each deal is visible only to the user who created it, enforced by the database. There is no public sign-up.
Every change recorded
Every save is kept as a version, and every deletion is logged with who and when.
Never used to train models
The model is a fixed set of rules. Your deal data is never used to train any model, ours or anyone else's.
Make separation risk visible, before it impacts value.
A 30-minute walk-through on an illustrative deal, or on one of yours under NDA.