MC

Knowledge Base

Methodology, glossary, and playbooks for separation economics diligence — written for the deal team, not just the model.

Knowledge Base/Functional Area Primers
Functional Area Primers
2 min read

Contracts / Procurement

Lost purchasing scale on shared vendor agreements — quiet, ongoing, and easy to underestimate until the vendor sends the new pricing.

When a business unit is carved out, combined purchasing volume across the parent and the divested unit typically splits, which can trigger repricing on enterprise vendor agreements — software licenses, logistics, facilities, professional services — negotiated on the combined volume.

  • Volume-tier discounts that reset when purchasing volume drops below a contractual threshold
  • Minimum commitment clauses that become harder to meet post-separation
  • Contract assignment or change-of-control provisions that may require vendor consent or trigger renegotiation
  • Loss of preferred-vendor status or negotiating leverage built up over years of combined spend

Watch out: Vendor repricing risk is easy to miss in diligence because it doesn't show up until the vendor is actually notified of the separation — reviewing change-of-control and minimum-commitment clauses in the top 10–15 vendor contracts by spend early is one of the highest-leverage diligence steps available.

Typical persistence: ongoing, unless actively renegotiated — this is the category recovery actions like "review vendor volume discount exposure" are built to address.