A transition services agreement (TSA) is a contractual arrangement under which the seller provides specified services to the buyer for a defined period after completion, typically to bridge the time between completion and full operational separation. TSAs are common in carve-out transactions (where a division or subsidiary is being separated from a larger group) and in deals where the buyer needs the seller’s continued involvement to access systems, customers, or know-how.
Pricing under a TSA can be cost-plus, fixed fee, or at-cost, and the agreement should specify clearly which services are included, for how long, and on what termination notice.