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Variations: Divestiture of Facilities and Personnel
Divestiture at Inception. In the early era of outsourcing in the 1990’s and 2000’s, divestiture of the enterprise customer’s existing service delivery infrastructure and transfer (“re-badging”) of its in-scope personnel. Such transactions were analogous to sale-leasebacks of real property, in which an enterprise would monetize its investment in real property in cash in return for agreeing to become a tenant for an extended term. In the field of services, such divestitures of facilities and personnel might be called a “sale-service-back” since the divestiture would be followed by a long-term services agreement for services provided using facilities and personnel who were formerly controlled by the enterprise customer.
Limiting Conditions. More recently, such divestitures and transfers have become less frequent for outsourcing deals for several reasons.
Accordingly, divestitures and rebadging occur but are less frequent that in the early era of outsourcing.
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