Carve-outs are no longer the exception; they are now a standard part of strategic corporate management. This involves legally, organizationally, and often culturally separating a part of the company, such as a subsidiary, business unit, or brand, from the parent company. The aim may be a sale, an IPO, independence, or a joint venture.
The reasons for doing so are varied: companies can focus on their core business, create financial leeway or prepare for the next growth step, internally and externally.
In practice, this means identifying and separating processes, IT systems, personnel, customer contracts, and other assets from the company and then setting them up separately. This is often done under time pressure and is highly complex.
Communication is crucial, and it starts at the top
Key financial figures, legal structures, and operational details of a carve-out are usually carefully thought through. However, one elementary success factor is often overlooked: communication. Especially in times of profound change, orientation is needed – and ideally, this comes from the CEO himself.
Particularly in a carve-out, company management must create trust, show perspectives, and make the ‘why’ of the step comprehensible. After all, economic logic alone is not convincing—acceptance comes from credible, consistent communication.
M&A advisors should also consider this aspect at an early stage: integrating communication from the outset significantly increases the likelihood of a successful transaction.
Corporate Communications challenges in carve-outs
A carve-out often triggers uncertainty among employees, customers, partners and the media. ‘What does this mean for me?’ is the key question all stakeholders ask. Communications advisors must therefore work closely with those responsible for the deal at an early stage. After all, communication is not an add-on, but an integral part of the transaction.
Key communication challenges:
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Narrative and positioning
Why is the carve-out taking place? What is the goal? What is changing—and what is staying the same? These questions must be answered early and consistently. A strong narrative prevents rumours, provides orientation, and helps build trust.
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Multi-stakeholder communication
The trick is to reach different target groups with different needs and levels of knowledge:
- Employees of both units (spun-off division and remaining organisation)
- Managers who act as local communicators
- Customers and business partners
- Investors and analysts
- Media and the public
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Timing and tact
A common misconception is that communication only begins with the official announcement. It starts much earlier, internally—e.g., in the management circle—and prepares various scenarios. Discretion is significant in the pre-signing phase, but you still need a communication concept ‘in the drawer’ that takes effect immediately if necessary.
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Change communication and culture.
Carve-outs are not only structural but also cultural changes. Employees who move to the spun-off division lose a piece of their identity. If you want to win them over, you must offer perspectives – not just in PowerPoint, but in daily dialogue.
The vital role of CEO communication in a carve-out process
The CEO is the most critical communicator in a carve-out process, both internally and externally. His or her task is to convey the ‘why’ and create trust credibly. This is only possible if the messages are authentic, communicated regularly and transparently, and tailored to the target group.
In practice, this means town hall formats, video messages, Q&A sessions and one-to-one meetings with key individuals. The CEO of the remaining company and the (future) CEO of the spun-off unit must act as a team, even if they take different paths in the long term.
A common mistake is to leave communication to the legal department or the M&A team. However, stakeholders expect attitude, not just contracts.
Why M&A advisors need to include communication in their planning.
M&A teams are usually focused on valuation, due diligence and structuring. Communication often appears to be a ‘soft topic’. But it influences
– the mood in the company,
– the value of the unit,
– the reputation of the transaction – and therefore
– the likelihood that employees, customers and markets will accept the carve-out.
A communication error, such as an internal flow of information that is too late or misleading, can lead to top performers leaving, customers becoming unsettled, or the media taking a critical spin.
An information leak during a carve-out process can seriously affect an organization, affecting the transaction’s success and the company’s broader strategic position. Leaks can undermine valuation, disrupt negotiations, and create financial and regulatory risks. They may expose sensitive competitive data, cause internal uncertainty, and damage trust among employees and stakeholders. Moreover, such breaches can delay execution, attract unwanted public scrutiny, and lead to reputational harm. Proactively managing confidentiality and preparing for potential leaks is critical to maintaining control and ensuring a smooth carve-out process.
This is why M&A consultants should not view communication as a downstream PR process, but as a strategic part of the transaction. An integrated project team from the outset – consisting of M&A, HR, legal and communications consultants, preferably with M&A knowledge – significantly increases the chances of a successful carve-out.