Manufacturing divestitures involve complex transitions, including the separation of facilities, equipment, and operational processes. When divesting a manufacturing unit, shared facility management becomes a crucial consideration. In many cases, the divesting company and the buyer may need to continue sharing certain resources, such as production spaces, utilities, and logistics infrastructure, to ensure business continuity and minimize disruptions.

Divestiture consultancy plays a vital role in facilitating smooth transitions by helping businesses navigate the challenges of shared facility management. By implementing structured agreements and effective governance models, companies can ensure operational efficiency and compliance while maintaining their strategic business goals.

Understanding Shared Facility Management in Divestitures

Shared facility management refers to the coordinated use of manufacturing infrastructure, utilities, and services between the divesting entity and the acquiring company. This arrangement is often necessary when a complete physical separation is not immediately feasible due to operational, financial, or regulatory constraints. Common shared resources in manufacturing divestitures include:

• Production Lines – Equipment and machinery that serve both entities until full separation is achieved.

• Warehousing and Logistics – Shared storage, distribution, and supply chain networks.

• Utilities and Energy Supply – Common access to power, water, and other essential utilities.

• IT and Security Systems – Overlapping digital infrastructure that requires careful transition planning.

By structuring shared facility agreements effectively, companies can mitigate risks, maintain productivity, and optimize costs during the transition.

Key Strategies for Effective Shared Facility Management

1. Establishing Clear Service Agreements

A well-defined Shared Services Agreement (SSA) is crucial for governing the use of shared facilities. This agreement should outline:

• Scope of Shared Services – Defining which resources and services will be shared.

• Cost Allocation Models – Determining how expenses for maintenance, utilities, and operational costs will be divided.

• Operational Responsibilities – Assigning roles and accountability for managing shared facilities.

• Exit and Transition Plans – Setting clear timelines for eventual separation and independent operations.

By formalizing agreements, both parties can ensure clarity and avoid conflicts during the divestiture process.

2. Implementing Strong Governance and Oversight

Effective governance structures are essential to managing shared facilities efficiently. Companies should:

• Establish a joint management team responsible for overseeing shared operations.

• Implement regular performance reviews to assess compliance with the SSA.

• Develop dispute resolution mechanisms to address potential conflicts proactively.

With strong governance in place, businesses can maintain seamless operations while working towards full separation.

3. Managing Operational and Financial Risks

Sharing manufacturing facilities comes with inherent risks, including operational disruptions, security concerns, and financial liabilities. To mitigate these risks:

• Conduct risk assessments to identify vulnerabilities in shared operations.

• Implement business continuity plans to address potential supply chain disruptions.

• Ensure insurance coverage to protect against liabilities related to shared facility usage.

Engaging a divestiture consultancy can provide valuable risk management expertise, ensuring a smooth and secure transition.

4. Aligning IT and Security Protocols

Manufacturing divestitures often involve shared digital infrastructure, such as ERP systems, cybersecurity protocols, and data networks. Companies should:

• Establish temporary IT solutions to maintain operational continuity.

• Implement data access controls to protect sensitive business information.

• Develop a transition plan for migrating IT systems to independent platforms.

Maintaining strong cybersecurity and IT governance reduces the risk of data breaches and ensures compliance with regulatory requirements.

5. Planning for Full Facility Separation

While shared facility management serves as a temporary solution, companies must work towards complete operational independence. Key steps in facility separation planning include:

• Conducting feasibility studies to determine optimal separation timelines.

• Securing alternative manufacturing sites or expanding existing operations.

• Establishing independent supply chain networks to minimize reliance on shared logistics.

Having a structured separation strategy ensures that both entities can transition smoothly without long-term dependencies.

Best Practices for Successful Shared Facility Management

1. Engage Expert Advisors Early

Working with experienced consultants can streamline shared facility management. A divestiture consultancy can assist with:

• Structuring service agreements that align with business objectives.

• Managing legal, financial, and operational risks.

• Ensuring regulatory compliance throughout the transition.

2. Foster Open Communication Between Stakeholders

Transparent communication is key to avoiding misunderstandings and operational disruptions. Companies should:

• Conduct regular meetings with key stakeholders to discuss shared facility operations.

• Provide clear reporting structures to address concerns and resolve conflicts.

• Engage employees in the transition process to ensure smooth collaboration.

3. Maintain Compliance with Legal and Regulatory Requirements

Regulatory compliance is critical in manufacturing divestitures, especially when shared facilities involve hazardous materials, environmental considerations, or labor laws. Businesses must:

• Adhere to local and international safety standards.

• Ensure compliance with data privacy and security regulations.

• Implement environmental and sustainability practices in shared facility operations.

4. Establish Clear Exit Strategies

Since shared facilities are a temporary solution, having a well-defined exit plan is essential. This includes:

• Setting specific milestones for operational independence.

• Determining financial and logistical contingencies for unforeseen challenges.

• Ensuring both parties are aligned on the long-term strategic direction of the divested entity.

Shared facility management is a critical aspect of manufacturing divestitures, requiring careful planning and structured execution. By developing clear agreements, implementing strong governance, and managing risks effectively, companies can ensure a smooth transition while maintaining operational efficiency. 

Engaging a divestiture consultancy can provide the necessary expertise to navigate these complexities and support long-term success. With a proactive approach, businesses can achieve seamless facility transitions and position themselves for sustainable growth.

Related Resources: 

Strategic Timing: Market Conditions and Divestiture Success Rates
Customer Contract Migration Strategies in Service-Based Divestitures
Environmental Liability Assessment and Allocation in Asset Sales
Divestiture Due Diligence: A Comprehensive Seller's Guide
Corporate Treasury Functions: Separation Planning and Execution