How to approach the task of separating two companies
When two companies need to be separated, the challenge is substantial: many systems and processes are shared, and the organisations are not clearly divided. Strong governance and tight planning are essential to ensure that all stakeholders come out on the other side in good shape.
Following a management decision to separate Silvan from the Stark Group, both companies were faced with the major task of disentangling their organisations and IT systems. The focus was on both the technical aspects and the knowledge transfer related to processes and systems. At the same time, ongoing stakeholder management played a significant role throughout the entire process.
Read the full case below.
Challenge
Stark Group was preparing to separate Silvan from the rest of the business, as the American owners of Stark Group had made a strategic decision to divest Silvan.
A so‑called carve‑out process is often characterised by a tight timeline and typically involves a significant number of stakeholders, as both the divesting company and the newly independent company must be able to operate effectively after the split.
In this specific project, around 150 IT applications had to be separated, including HR systems, finance, accounting, store systems, product catalogues, procurement and sales – all business‑critical systems. The entire IT department, including development, operations and support, belonged to Stark Group, meaning that Silvan had to build its own new centre. Organisationally, employees were also affected, as structures, processes and organisational setups in both companies would be impacted.
Solution
Two elements were absolutely central: planning and managing the entire process, and direct access to the right knowledge holders to ensure that the separation would result in two fully functioning organisations. At the same time, ongoing stakeholder management was fundamental to maintaining coherence and effectiveness throughout both the process and the outcome.
The first step was to create a robust plan with a series of clearly defined milestones. Planning took place across all parties to ensure shared understanding and commitment to delivering the required work in each phase. This planning process took time and was challenged by the need for the various IT suppliers to provide their estimates for how long the technical work of splitting the IT systems would take. A detailed, cross‑organisational cut‑over plan was also created to ensure an efficient and seamless go‑live for Silvan on the new systems. Afterwards, responsibility for operations and support of IT systems, as well as organisational processes, was formally handed over.
Access to the key knowledge holders was established quickly, and both Stark Group and Silvan maintained a strong focus on ensuring the best possible basis for making the right decisions for both organisations. Throughout the process, the importance of knowledge transfer became very clear, as both the number and placement of the key knowledge holders depended on many factors outside the project’s control. At the same time, there was strong leadership focus in both Silvan and Stark – in both IT and the business – on meeting the tight deadlines.
Overall, the project shifted its focus over time: in the clarification/knowledge phase, the project was oriented primarily towards the divesting organisation (Stark Group). In the middle phase, both the divesting and the newly independent company were at the centre together with the suppliers, as the work focused on plans for splitting IT systems, data management, etc. In the third phase – the hand‑over/operations phase – the focus shifted towards the newly independent organisation (Silvan), with an emphasis on operations, support, processes and organisational structures.
Result
From Stark Group’s perspective, the goal has been achieved and the process has worked well: both companies remain fully functional. There is a clear expectation and a positive assessment that the right foundation has been established to ensure that Silvan can continue operating without experiencing significant disruption from the separation.
One of the clear keys to success has been the commitment of the knowledge holders, the strong leadership focus, and the project’s ability to maintain consistent attention on the task across both organisations (Stark Group and Silvan). In any carve‑out, challenges will inevitably arise only once day‑to‑day operations settle and the organisation finds its rhythm again, but with a solid foundation the new organisation will be well equipped to find solutions – and potentially even optimise the business.
The American owners of Stark Group have also achieved the desired outcome: the deadline was met, and the strategic objective of divesting Silvan has been fulfilled.
kaastrup|andersen and Miracle handled part of the management responsibilities within the project.
Thank you for the strong collaboration on a challenging project that was successfully managed to the finish line, ensuring that both we and Silvan were able to maintain full production and IT support for employees and customers throughout and after the separation.
Gry Ellerbæk Ørndrup
Program director, Stark Group
