A Transitional Service Agreement (TSA) is a contract that outlines the terms and conditions for the continuation of services between the buyer and seller during a business transition or M&A transaction process. The TSA enables the continued provision of services, access to information, and support to ensure a smooth transition period.

The purpose of a TSA is to provide a bridge between the seller`s existing operations and the buyer`s future operations. It ensures that the buyer has enough time to provide the necessary resources and infrastructure for the acquired business to function as intended. The TSA also helps to reduce risks and minimize disruptions during the transition period.

A TSA typically includes a detailed description of the services to be provided, the duration of the TSA, and the terms and conditions of the agreement. It also sets out the responsibilities and obligations of both parties, including deliverables, pricing, and performance metrics.

The scope of a TSA can vary depending on the complexity of the transition process. The agreement can cover any service that is critical to the business transition, including IT systems, human resources, accounting, legal, and any other essential functions.

TSA agreements are commonly used in mergers and acquisitions, where the buyer may need to rely on the seller`s systems, processes, and personnel to run the acquired business. It provides assurance to the buyer that the business will continue to operate seamlessly during the transition period and allows the buyer to focus on integrating the acquired business into its operations.

In conclusion, a Transitional Service Agreement provides a valuable framework for ensuring a smooth business transition. It enables the buyer and seller to maintain uninterrupted operations and minimize disruptions. By defining the services, deliverables, and responsibilities of both parties, the TSA helps to mitigate risks, reduce costs, and ensure a successful transition.