---
title: Small gaps at separation. Big costs at valuation.
description: Carve-outs move legal ownership, but know-how, code and data rarely follow. Why IP confusion builds for years – and how to fix it before the next deal.
image: https://www.intanify.com/hubfs/Small%20gaps%20at%20separation.%20Big%20costs%20at%20valuation.png
---

[Skip to content](https://www.intanify.com/insights/small-gaps-at-separation.-big-costs-at-valuation#main-content)

[![Colour=White, Size=Large](https://www.intanify.com/hs-fs/hubfs/Colour=White%2c%20Size=Large.png?width=311&height=80&name=Colour=White%2c%20Size=Large.png "Colour=White, Size=Large")](https://www.intanify.com/)

[Back to Insights](https://insights.intanify.com/)

 30 September, 2026

# Small gaps at separation. Big costs at valuation.

[By Intanify](https://www.intanify.com/insights/author/by-intanify)

Share: [facebook-f icon](http://www.facebook.com/share.php?u=https://www.intanify.com/insights/small-gaps-at-separation.-big-costs-at-valuation) [linkedin-in icon](http://www.linkedin.com/shareArticle?mini=true&url=https://www.intanify.com/insights/small-gaps-at-separation.-big-costs-at-valuation) [Twitter icon](https://twitter.com/intent/tweet?url=https://www.intanify.com/insights/small-gaps-at-separation.-big-costs-at-valuation) [pinterest-p icon](http://pinterest.com/pin/create/link/?url=https://www.intanify.com/insights/small-gaps-at-separation.-big-costs-at-valuation) [envelope icon](mailto:?body=https://www.intanify.com/insights/small-gaps-at-separation.-big-costs-at-valuation)

A business with revenue in the hundreds of millions of dollars was carved out of a large listed group three and a half years ago. Its general counsel still can't say with confidence whether the business owns everything behind the products that earn its revenue.

The business is running with this today. Products are priced, partnerships signed and people hired/fired on assumptions about ownership that are not certain. A few people inside the business know where the dependencies sit. The people making the commercial decisions often don't.

Each quarter it runs this way, the uncertainty is written into more contracts and commitments. **The risk grows with each one.**

This piece uses carve-outs and divestitures, where the problem is sharpest, to examine why IP confusion builds year on year whenever a business changes shape, what the deal typically leaves unexamined, and how to build clarity in at the start rather than cleaning up afterwards.

### Carve-outs are only the sharpest example

According to McKinsey, more than a quarter of M&A deals above $100m involve buying part of a company rather than the whole. It’s a huge part of what private equity does.

But the pattern reaches much further. Most businesses change shape more than once. They acquire and are acquired. They merge, sell a division, spin out a venture or set up a new group structure. Sometimes the team that built the core product simply leaves.

Each change moves legal ownership. Know-how, code, data and relationships don't move so neatly. They sit with people, in shared systems and in ways of working that pay no attention to legal boundaries. Over time, the paperwork stops matching how the business makes money.

### At the deal: what gets checked, and what doesn't

Deals are usually good for registered IP. Patents, trademarks and key licences get listed, scheduled and assigned. That is typically only 20–35% of a company's intangible value. The other 65–80% is unregistered: the know-how held by specific people, shared code and platforms, data, trade secrets – and how each of these connects to the products that earn revenue.

These rarely appear on a schedule. They move by default and assumption, rather than by design. Some come across in full and some stay behind, but many end up used by both sides with no clear owner. The deal closes on the part that's easy to see.

### Year one: everything still works

In the months after separation, the former parent usually keeps shared systems and services running while the new business builds its own.

This is where the gaps hide. Nothing has broken, so nothing prompts the question. The software still runs. The data still flows. The engineers who know how it all works are still a phone call away.

These handover arrangements are hard to get right. In a 2024 McKinsey survey of separation leaders, 42% said they struggled with how long they should last and what they should cost. 61% needed at least one longer-term agreement to keep things running.

When the handover ends, the business finds out what it had been relying on without owning.

### Year two: decisions made without the full picture

By year two, the business is making commercial decisions on its own. That is when the gaps start to cost.

Products get priced without a clear view of what sits underneath them (are we licensing data that is a crown jewel underpinning proprietary products?). Partnerships and licences get signed over assets whose ownership is uncertain, or that depend on something the business doesn't control. A customer asks for exclusivity over a capability that is partly built on the former parent's code.

Meanwhile, documents keep surfacing – an old licence here, a joint development agreement there – and each one changes what was assumed.

Each decision is sensible on its own. Together, they build on the original gap.

### The bill arrives at the next funding round or exit

Eventually, an investor or a buyer asks.

Due diligence asks the questions the original deal didn't. What do you own? What do you license, and from whom? Which products depend on your former parent, and on what terms?

A business that needs weeks to establish what it owns looks like a riskier one – and gets priced that way.

The consequences are familiar to anyone who has sat on either side of a deal: a slipping timetable, a lower price, part of the money held back, tougher warranties, or a deal that doesn't complete.

And the cost doesn't stop at completion. Aon's latest study of warranty insurance claims on North American deals found that IP breaches now account for more than 10% of losses paid out – double the share in the previous year's study. **Almost a third of those IP losses (32%) came from disputes over licences and royalty fees.**

This matters because carve-outs run on licences. Every shared asset, and every licence to or from the former parent, is a potential dispute waiting for the next owner to inherit.

**By the time a buyer asks, the gap has a price.**

### Building clarity in from the start

Clarity is best built during the deal itself – and it can start before due diligence does. Intanify clients use our Outside-In capability to build a view of a business's intangible assets before formal diligence begins, so the right questions are asked from day one.

**On the buy side:**

- Establish what comes with the business and what stays behind – including the unregistered assets.
- Check which products depend on know-how held by people who aren't transferring.

**On the sell side:**

- Define what is going and how it connects to what stays, so the price holds and disputes don't follow.
- Record every shared asset and who owns it.
- Make a clear IP register part of what is handed over at completion.

For businesses that separated years ago, the gaps can still close the gaps. Doing it now keeps it an internal exercise, rather than a buyer's question.

### The cheapest moment

When a business changes shape, the cost of getting clarity on its IP is at its lowest. The next best time is before anyone else asks.

[VALUATION](https://www.intanify.com/insights/tag/valuation), [M&A](https://www.intanify.com/insights/tag/ma), [DISCOVERY](https://www.intanify.com/insights/tag/discovery)

[Go home](https://www.intanify.com/) [Follow us on Facebook](mailto:hello@intanify.com) [linkedin-in icon](https://www.linkedin.com/company/intanify/)

[![intanify\_logo\_white\_transparent\_bg](https://www.intanify.com/hs-fs/hubfs/intanify_logo_white_transparent_bg.png?width=200&height=51&name=intanify_logo_white_transparent_bg.png "intanify_logo_white_transparent_bg")](https://www.intanify.com)

Copyright © 2026, Intanify Limited

```json
{
  "@context" : "https://schema.org",
  "@type" : "BlogPosting",
  "author" : {
    "@type" : "Person",
    "name" : "By Intanify",
    "url" : "https://www.intanify.com/insights/author/by-intanify"
  },
  "dateModified" : "2026-09-30T07:00:01.352Z",
  "datePublished" : "2026-09-30T07:00:01.000Z",
  "headline" : "Small gaps at separation. Big costs at valuation.",
  "image" : [ "https://www.intanify.com/hubfs/Small%20gaps%20at%20separation.%20Big%20costs%20at%20valuation.png" ],
  "mainEntityOfPage" : {
    "@id" : "https://www.intanify.com/insights/small-gaps-at-separation.-big-costs-at-valuation",
    "@type" : "WebPage"
  },
  "publisher" : {
    "@type" : "Organization",
    "logo" : {
      "@type" : "ImageObject",
      "url" : "https://www.intanify.com/hubfs/intanify_logo_black.svg"
    },
    "name" : "Intanify"
  }
}
```