Interim CTO for Carve-Outs: Standing Up Technology From Day One
Table of Contents
- Why Carve-Outs Fail on Technology
- The First 90 Days: Your Tech Roadmap
- Transition Service Agreements and Sequencing
- Identity, Access, and Data Separation
- Building Your Standalone Tech Foundation
- Security Audit Readiness From Day One
- Hiring Your Technical Leadership Team
- The Role of an Interim CTO in Carve-Outs
- Common Pitfalls and How to Avoid Them
- Next Steps and Implementation
Why Carve-Outs Fail on Technology {#why-carve-outs-fail}
Carve-outs are brutal. You’re spinning out a business unit—or acquiring one—and suddenly you need to operate independently. No parent-company infrastructure. No shared IT support. No inherited identity platform. No data warehouse that someone else maintains.
The statistics are grim. According to 6 Technology Due Diligence Imperatives in Carve-outs from BCG, technology failures account for 30–40% of carve-out delays and cost overruns. Most of those failures happen because:
Technology gets treated as a back-office problem. The CEO and CFO focus on revenue, customers, and financials. IT is assumed to “just work.” Until it doesn’t.
Transition Service Agreements (TSAs) are too long and too dependent. A 24-month IT TSA with the parent company sounds safe. In practice, it locks you into legacy systems, delays modernisation, and creates a cliff when the TSA expires. You’re not building a standalone business; you’re building a ticking time bomb.
Identity and access control are an afterthought. You inherit Active Directory, SSO, and role-based access from the parent. When you separate, you have no idea who has access to what, where your secrets are stored, or how to provision a new employee without calling the parent’s IT team.
Data separation is messy and slow. Financial data, customer data, operational data—it’s all tangled up in parent-company databases, data warehouses, and analytics platforms. Extracting it cleanly takes months. Meanwhile, you can’t operate independently because you can’t access your own data.
Security audit readiness is non-existent. When you’re a carve-out, you inherit the parent’s SOC 2 or ISO 27001 certification. The moment you separate, you lose that. You have 90 days to get audit-ready, but your infrastructure is a patchwork of inherited systems, temporary fixes, and undocumented processes. You fail the audit. You miss enterprise deals.
The solution is straightforward: hire an interim CTO on day one, give them a 90-day mandate, and build a technology roadmap that assumes independence from day 1.
The First 90 Days: Your Tech Roadmap {#first-90-days}
Your interim CTO has three objectives in the first 90 days:
- Stabilise operations – ensure the business doesn’t lose access to critical systems
- Plan separation – map out what stays, what goes, what needs to be rebuilt
- Execute day-one readiness – have standalone infrastructure, identity, and data access in place before the TSA expires
This isn’t theoretical. Here’s a concrete timeline:
Week 1–2: Audit and Inventory
Your interim CTO needs to answer these questions:
- What systems does the business depend on? (ERP, CRM, data warehouse, communication tools, payment processing, identity platform)
- Which systems are shared with the parent? Which are dedicated?
- What data lives where? How is it accessed today?
- Who has access to what? How are permissions managed?
- What’s the current security posture? Are there any compliance certifications (SOC 2, ISO 27001, HIPAA, PCI)?
- What’s the technical debt? What systems are fragile or undocumented?
Don’t rely on the parent company’s documentation. It’s usually incomplete or outdated. Walk the infrastructure. Interview the people who actually operate it. Build a RAID log (Risks, Assumptions, Issues, Dependencies) and update it weekly.
Week 3–4: Design the Target State
Now you know what you have. Design what you need:
- Identity and Access: Will you use Azure AD, Okta, or another provider? How will you migrate from the parent’s system? What’s the cutover plan?
- Data and Analytics: What data do you need to operate independently? Where will it live? How will you extract it from the parent’s systems without breaking anything?
- Infrastructure: Will you use AWS, Azure, Google Cloud, or on-premises? What’s the cost, security, and scalability trade-off?
- Applications: What’s staying, what’s going, what needs to be rebuilt or replaced?
- Security and Compliance: What audit certifications do you need? What’s the timeline to achieve them?
The target state should be documented in a single 10–15 page technical strategy. This isn’t a 200-page architecture document. It’s a clear statement of what you’re building and why.
Week 5–8: Execute the Build
Now you’re in execution mode. Your interim CTO is working with the parent’s IT team to:
- Stand up a dedicated cloud environment or data centre
- Migrate identity to a standalone platform
- Extract data from shared systems and load it into your own data warehouse
- Set up monitoring, logging, and alerting
- Document all critical processes
- Build runbooks for common operational tasks
This is where you’ll discover that the parent’s IT team is stretched thin, or they don’t want to help, or they’re contractually obligated to provide minimal support. This is expected. Plan for it. Your interim CTO should be hands-on here, not delegating everything to the parent’s team.
Week 9–12: Harden and Prepare for Audit
You’re 90 days out from independence. Your systems are running. Now you need to make them audit-ready:
- Document all security controls
- Set up access logging and monitoring
- Implement change management processes
- Create incident response procedures
- Prepare evidence for SOC 2 or ISO 27001 audit
- Train your team on security policies
Your goal is to be audit-ready by week 12. You may not have your full certification, but you should be able to demonstrate compliance to an external auditor.
Many carve-out teams use Vanta to accelerate this process. Vanta automates evidence collection and policy management, which is critical when you’re building from scratch. Your interim CTO should integrate Vanta into the tech plan by week 4.
Transition Service Agreements and Sequencing {#tsa-sequencing}
A Transition Service Agreement (TSA) is a contract between the parent company and the carve-out that defines what IT services the parent will provide, for how long, and at what cost. TSAs are necessary, but they’re also dangerous if you’re not careful.
The TSA Trap
Most carve-out teams negotiate a 24–36 month IT TSA because it feels safe. The parent will keep the lights on while you build your own infrastructure. In practice, this creates three problems:
First, you never actually separate. You’re still dependent on the parent’s systems, processes, and people. When something breaks, you can’t fix it yourself. You’re at the mercy of the parent’s IT team’s priorities and capacity.
Second, the TSA becomes a financial anchor. The parent charges you for IT services at cost-plus rates. Over 24 months, that’s millions of dollars. And the costs are often unpredictable because the parent’s IT team is managing a complex carve-out while maintaining the rest of the business.
Third, you hit a cliff. When the TSA expires, you’re suddenly on your own. If you haven’t actually built standalone infrastructure, you’re in crisis mode. You’re scrambling to migrate systems while running a live business.
According to Executing Carve-outs without IT TSAs from Alvarez & Marsal, the best carve-out teams minimise TSA duration and dependency by building standalone infrastructure in parallel with the parent relationship.
The Interim CTO’s TSA Strategy
Here’s how your interim CTO should approach TSAs:
Negotiate a short, scoped TSA (6–12 months maximum). The TSA should cover only what’s truly hard to separate: legacy systems that are tightly integrated, shared databases that are expensive to split, or services that have long lead times to replace.
Define clear exit criteria. The TSA should have specific, measurable milestones: “By month 3, the carve-out will have a standalone identity platform. By month 6, all customer data will be extracted and loaded into the carve-out’s data warehouse. By month 9, all TSA-dependent systems will be replaced or migrated.”
Build in parallel. Don’t wait for the TSA to expire to start building. From day 1, your interim CTO should be architecting and standing up standalone systems. The TSA is a safety net, not a crutch.
Track TSA costs obsessively. Every service the parent provides through the TSA has a cost. That cost is money you’re not spending on building your own infrastructure. Create a detailed cost model and track it monthly. When a TSA service costs more than building it yourself, build it yourself.
Plan for TSA extensions (but expect not to need them). Sometimes you’ll need an extra 3–6 months to finish a migration. That’s okay. But don’t plan for it upfront. Plan to be independent in 12 months. If you need more time, negotiate it then.
Sequencing the Separation
Not all systems should be separated at the same time. Your interim CTO should prioritise based on:
- Business criticality: What systems does the business need to operate every day?
- Complexity of separation: How hard is it to extract from the parent’s infrastructure?
- Time to rebuild: How long will it take to stand up a replacement?
- Cost of delay: What’s the financial impact if you delay separation?
A typical sequencing looks like this:
Phase 1 (Months 1–3): Identity and access, basic cloud infrastructure, monitoring and logging
Phase 2 (Months 4–6): Data warehouse and analytics, email and collaboration tools, financial systems
Phase 3 (Months 7–9): Customer-facing systems, operational dashboards, backup and disaster recovery
Phase 4 (Months 10–12): Legacy system replacements, final TSA dependencies, security audit completion
This sequencing ensures that by month 12, you’re operating independently on all critical systems. The parent’s IT team is still available for non-critical legacy systems, but you’re not dependent on them.
Identity, Access, and Data Separation {#identity-access-data}
Identity and access control are the hardest part of a carve-out. They’re also the most critical.
When you’re part of the parent company, identity is simple: everyone’s in Active Directory, SSO is configured, and the parent’s IT team manages access. When you separate, you need to replicate that entire infrastructure independently.
Identity Platform Migration
Your interim CTO needs to choose an identity platform. The options are:
- Azure AD (Microsoft Entra ID): Good if you’re already using Microsoft 365. Integrates well with Windows environments. Expensive if you’re not already a Microsoft shop.
- Okta: Industry standard for SaaS companies. Integrates with almost everything. Higher cost, but worth it if you need flexibility.
- Google Workspace Directory: Good if you’re using Google Workspace for email and collaboration. Limited compared to Azure AD or Okta, but sufficient for many startups.
- On-premises Active Directory: Avoid this for a carve-out. It’s expensive to maintain, hard to scale, and creates security risks.
The migration process is:
- Audit current access: Who has access to what? What are their roles? What are the dependencies?
- Design the target state: How will roles map to the new identity platform? What’s the access model?
- Test with a pilot group: Migrate 10–20 people first. Identify issues. Fix them.
- Migrate in waves: Move everyone else in batches of 50–100 people. Minimize disruption.
- Verify access: After migration, verify that everyone can access what they need and nothing they don’t.
- Decommission old accounts: Once everyone’s migrated, remove access from the old system.
This usually takes 6–8 weeks. Plan for it in months 1–2 of your 90-day window.
Data Separation
Data separation is more complex than identity because data is everywhere:
- Customer data in the CRM
- Financial data in the ERP
- Operational data in the data warehouse
- Logs and metrics in monitoring systems
- Documents and files in shared storage
Your interim CTO needs a data separation strategy:
Step 1: Inventory all data. Where does each data type live? Who owns it? How is it accessed? What’s the volume?
Step 2: Classify by criticality. What data is essential to operate the business? What’s nice-to-have? What can you leave behind?
Step 3: Design extraction logic. How will you extract data from the parent’s systems? Will you use API calls, database replication, ETL tools, or manual exports?
Step 4: Build and test. Set up a standalone data warehouse (usually Snowflake, BigQuery, or Redshift). Extract a sample of data. Validate that it’s complete and accurate.
Step 5: Plan the cutover. On day 1 of independence, your data needs to be current. This usually means a final extract and load on the day of separation, followed by a period where you’re reading from both the parent’s system and your own (for verification).
Step 6: Verify and monitor. After cutover, monitor data quality obsessively. Are the numbers right? Are there any gaps? Are there any inconsistencies?
Data separation is often the longest part of a carve-out. It can take 3–4 months if you’re doing it right. Start in week 3 of your 90-day window.
Access Control and Least Privilege
Once you’ve migrated identity and separated data, you need to implement proper access control.
Principle of least privilege: Everyone should have access to the minimum data and systems they need to do their job. No more, no less.
This is critical for two reasons:
- Security: If an account is compromised, the attacker can only access what that account has access to. If everyone has access to everything, one compromised account is a company-wide breach.
- Compliance: SOC 2 and ISO 27001 auditors will ask for evidence of least-privilege access control. If you can’t demonstrate it, you’ll fail the audit.
Implementing least privilege requires:
- Role-based access control (RBAC): Define roles (e.g., “Finance Analyst”, “Customer Success Manager”, “Engineer”). Assign permissions to roles, not individuals.
- Regular access reviews: Every quarter, review who has access to what. Remove access that’s no longer needed.
- Segregation of duties: Critical functions should require approval from multiple people. For example, no one person should be able to approve a payment and execute it.
- Audit logging: Log all access to sensitive data. Track who accessed what, when, and why.
Your interim CTO should have this in place by week 8 of the 90-day window. It’s essential for audit readiness.
Building Your Standalone Tech Foundation {#standalone-foundation}
Once you’ve separated identity and data, you need to build the foundational infrastructure that will support your business independently.
Cloud Infrastructure
Most carve-outs move to cloud (AWS, Azure, or Google Cloud). Cloud gives you:
- Scalability: You can add capacity without buying hardware
- Managed services: You don’t have to manage databases, message queues, or other infrastructure
- Cost flexibility: You pay for what you use
- Security: Cloud providers invest heavily in security
Your interim CTO should:
- Choose a cloud provider based on your existing systems, team expertise, and cost
- Design a landing zone – a secure, scalable foundation for all your applications
- Set up networking, security groups, and VPCs to isolate your infrastructure
- Implement identity and access management at the cloud level (IAM roles, service accounts)
- Set up monitoring and logging so you can see what’s happening in your infrastructure
- Plan for disaster recovery – how will you recover if a region goes down?
This is a 4–6 week project. Start in week 2 of your 90-day window so you have time to test and iterate.
Monitoring, Logging, and Alerting
You can’t operate a system you can’t see. Your interim CTO needs to set up comprehensive monitoring from day 1.
Monitoring: Track the health of your systems. Are they up? Are they responding to requests? Are they using too much CPU or memory?
Logging: Capture everything that happens in your systems. Who accessed what? What errors occurred? What changed?
Alerting: When something goes wrong, notify the right person immediately. Don’t wait for a customer to report it.
Tools like Datadog, New Relic, or Splunk are standard. They’re expensive, but worth it. You need visibility into your systems, especially during a carve-out when everything is fragile.
Backup and Disaster Recovery
You need a backup strategy from day 1. This includes:
- Regular backups of all critical data (daily or more frequently)
- Offsite storage so a data centre failure doesn’t wipe out your backups
- Recovery time objective (RTO): How quickly can you recover if something fails? (Usually 1–4 hours for a carve-out)
- Recovery point objective (RPO): How much data can you afford to lose? (Usually 1 hour or less)
- Regular testing of recovery procedures so you know they actually work
Don’t skip this. A carve-out is already fragile. If you lose data, you’re done.
Documentation and Runbooks
Your interim CTO should document everything:
- Architecture diagrams showing how systems connect
- Runbooks for common operational tasks (restarting services, deploying code, responding to incidents)
- Escalation procedures for when things go wrong
- Contact lists for vendors and support teams
- Change management procedures so people don’t accidentally break things
This documentation is essential for two reasons:
- Operational continuity: When your interim CTO leaves, the rest of your team needs to know how to operate the systems
- Audit compliance: Auditors will ask for documentation. If you don’t have it, you’ll fail
Security Audit Readiness From Day One {#security-audit}
When you separate from the parent company, you lose any inherited security certifications. If the parent had SOC 2 Type II or ISO 27001, you start from zero.
You have two options:
- Get certified immediately – achieve SOC 2 or ISO 27001 within 90 days of separation
- Get audit-ready – have all the controls in place and documented, but defer the formal audit for 3–6 months
Most carve-out teams choose option 2. It’s faster and less expensive. But you need to be audit-ready so that when you do get audited, you pass.
SOC 2 vs ISO 27001
SOC 2 is a US standard for security, availability, and confidentiality. It’s what most US enterprise customers ask for. SOC 2 Type I is a point-in-time audit (“on this date, you had these controls”). SOC 2 Type II is an audit over time (“over the past 6–12 months, you maintained these controls”).
ISO 27001 is an international standard for information security management. It’s what most non-US enterprise customers ask for. It requires a documented information security management system (ISMS) and annual audits.
For a carve-out, your interim CTO should plan for both. Most enterprise customers ask for at least one, and many ask for both.
According to PADISO’s Security Audit service, the fastest path to audit-readiness is:
- Implement core controls (access control, encryption, logging, incident response)
- Document everything (policies, procedures, evidence)
- Use automation tools (like Vanta) to collect evidence and maintain compliance
- Get audited by a reputable auditor (Big Four or mid-market firm)
This usually takes 12–16 weeks from scratch. But if you start on day 1 of the carve-out, you can be audit-ready by month 4.
Core Security Controls
Your interim CTO should prioritise these controls:
Access Control:
- Multi-factor authentication (MFA) for all users
- Least-privilege access (everyone has the minimum access they need)
- Regular access reviews and removal of unnecessary access
- Segregation of duties (critical functions require approval from multiple people)
Data Protection:
- Encryption of data in transit (TLS/SSL)
- Encryption of data at rest (AES-256 or equivalent)
- Data classification (public, internal, confidential)
- Data retention policies (how long you keep data)
Monitoring and Logging:
- Centralized logging of all security events
- Alerting on suspicious activity
- Regular log review and analysis
- Retention of logs for at least 90 days (preferably 1 year)
Incident Response:
- Documented incident response plan
- Incident response team with clear roles
- Regular testing of incident response procedures
- Post-incident reviews to identify improvements
Vendor Management:
- Security assessments of all vendors
- Data processing agreements (DPAs) with vendors
- Regular monitoring of vendor security posture
These controls are table stakes for SOC 2 and ISO 27001. Your interim CTO should have them in place by week 8 of the 90-day window.
Hiring Your Technical Leadership Team {#hiring-leadership}
Your interim CTO is a temporary resource. They’re there to stabilise the business, plan the separation, and execute the first 90 days. But you need permanent technical leadership.
According to The human capital edge in carve-outs from AlixPartners, hiring the right leadership team is one of the most critical success factors in a carve-out.
The Permanent CTO
By month 2 of the carve-out, you should start recruiting a permanent CTO or VP of Engineering. This person will:
- Lead the technical strategy – where is the business going? What technology do we need to get there?
- Build the engineering team – hire engineers, set standards, build culture
- Manage vendors and external partners – choose cloud providers, SaaS tools, consulting firms
- Own the technology roadmap – what are we building this quarter? Next quarter?
- Report to the CEO – the CTO should be a peer to the CFO and COO
Finding a permanent CTO is hard. Look for someone with:
- Carve-out or separation experience – they’ve done this before
- Operational excellence – they care about reliability, security, and cost
- Leadership skills – they can hire, mentor, and inspire a team
- Business acumen – they understand how technology drives revenue
If you can’t find a permanent CTO, consider a fractional CTO arrangement. PADISO offers Fractional CTO & CTO Advisory in Sydney, as well as in Los Angeles, Boston, Seattle, Austin, Atlanta, New York, San Francisco, and Miami for teams that need ongoing technical leadership without a full-time executive.
The VP of Infrastructure / Infrastructure Lead
This person owns:
- Cloud infrastructure – AWS, Azure, or Google Cloud
- Networking and security – VPCs, firewalls, DDoS protection
- Databases and data warehouses – Postgres, MySQL, Snowflake, BigQuery
- Monitoring and observability – Datadog, New Relic, or equivalent
- Disaster recovery and business continuity – backups, failover, recovery
For a carve-out, this is a critical hire. You need someone who can stand up infrastructure from scratch and keep it running reliably.
The VP of Security / Security Lead
This person owns:
- Security architecture – designing systems to be secure by default
- Compliance – SOC 2, ISO 27001, HIPAA, PCI, GDPR, or whatever applies to your business
- Incident response – responding to breaches or security incidents
- Security training – educating employees about security
- Vendor security – assessing and monitoring security posture of vendors
For a carve-out, this person should start by month 3. You need to be audit-ready by month 4, and you can’t do that without dedicated security leadership.
Hiring Timeline
- Month 1: Start recruiting permanent CTO
- Month 2: Hire permanent CTO (or commit to fractional CTO arrangement)
- Month 2–3: Hire VP of Infrastructure
- Month 3: Hire VP of Security (or partner with external security firm for the first 6 months)
- Month 4+: Hire individual contributors (engineers, data engineers, DevOps specialists)
Don’t wait until month 6 to start hiring. You’ll be behind. Start recruiting in month 1, even if you don’t hire until month 2 or 3.
The Role of an Interim CTO in Carve-Outs {#interim-cto-role}
An interim CTO is different from a permanent CTO. They’re there for a specific mission: stand up the technology, plan the separation, and hand off to the permanent leadership team.
What an Interim CTO Does
Week 1–2: Assess
- Audit current systems, infrastructure, and data
- Interview stakeholders (CEO, CFO, business leaders, IT team members)
- Identify risks, dependencies, and critical issues
- Create a RAID log and update it weekly
Week 3–4: Plan
- Design the target-state architecture
- Define the separation strategy and timeline
- Create a detailed 90-day roadmap
- Negotiate TSA terms with the parent company
Week 5–8: Execute
- Lead the technical execution of the plan
- Work with the parent’s IT team on data extraction and system migration
- Stand up cloud infrastructure, identity platform, and data warehouse
- Set up monitoring, logging, and backup systems
- Document all critical systems and processes
Week 9–12: Harden and Hand Off
- Implement security controls and prepare for audit
- Train the permanent technical team on systems and processes
- Create runbooks and documentation
- Hand off to permanent CTO and infrastructure leadership
What an Interim CTO Doesn’t Do
An interim CTO is not:
- A permanent hire – they’re there for 90 days, not forever
- A hands-on engineer – they’re leading strategy and execution, not writing code
- A vendor salesman – they’re choosing the right tools, not pushing expensive solutions
- A consultant – they’re accountable for results, not just recommendations
How to Work with an Interim CTO
- Give them access and authority – they need to make decisions and execute without endless approvals
- Meet weekly with the CEO and CFO – keep leadership aligned on progress and risks
- Protect them from scope creep – they have 90 days and a specific mission. Don’t add new projects.
- Listen to their recommendations – they’ve done this before. If they say something is risky, believe them.
- Plan for their departure – by week 8, they should be training the permanent team. By week 12, they should be handing off completely.
Common Pitfalls and How to Avoid Them {#pitfalls}
Pitfall 1: Underestimating Data Separation
The problem: Data is tangled up in parent-company systems. Extracting it cleanly takes longer than expected. Meanwhile, you can’t operate independently because you can’t access your own data.
How to avoid it:
- Start data separation in week 3, not week 6
- Assign a dedicated data engineer to this project
- Test data extraction early and often
- Plan for a 2–3 week buffer before day 1 of independence
Pitfall 2: Ignoring Security Until the Last Minute
The problem: You’re focused on getting systems up and running. Security feels like a nice-to-have. By week 10, you realise you need SOC 2 certification, but you have no documented controls, no audit logging, and no incident response plan.
How to avoid it:
- Make security a day-1 priority
- Hire a security lead by month 3
- Implement core controls (MFA, encryption, logging) in the first 4 weeks
- Use Vanta to automate evidence collection
Pitfall 3: Negotiating a TSA That’s Too Long
The problem: You negotiate a 24-month IT TSA because it feels safe. In practice, you never actually separate. You’re still dependent on the parent’s systems. When the TSA expires, you hit a cliff.
How to avoid it:
- Negotiate a 12-month TSA maximum
- Define clear exit criteria and milestones
- Build standalone systems in parallel with the TSA
- Track TSA costs obsessively and replace services when it makes sense
Pitfall 4: Not Documenting Anything
The problem: Your interim CTO stands everything up, but there’s no documentation. When they leave, no one knows how the systems work. When an auditor asks for documentation, you have nothing.
How to avoid it:
- Make documentation a requirement from day 1
- Use a wiki or documentation tool (Confluence, Notion, etc.)
- Document as you build, not after
- Have the permanent team review and maintain documentation
Pitfall 5: Hiring the Wrong Permanent CTO
The problem: You hire a CTO who’s great at greenfield startups but terrible at operational excellence and security. They rip out the interim CTO’s work and rebuild everything from scratch. You miss audit deadlines and lose enterprise deals.
How to avoid it:
- Involve the interim CTO in the permanent CTO hiring process
- Hire someone with carve-out or separation experience
- Prioritise operational excellence and security over flashy technology
- Have a 30-day overlap where the interim CTO and permanent CTO work together
Pitfall 6: Underestimating the Complexity of Identity Migration
The problem: You assume identity migration will take 2 weeks. It actually takes 6 weeks because there are hidden dependencies, legacy systems that don’t integrate with the new identity platform, and users who have custom access configurations.
How to avoid it:
- Audit current identity and access in week 1
- Design the target state in week 2
- Test with a pilot group in week 3–4
- Migrate in waves in week 5–8
- Plan for a 2–3 week buffer for unexpected issues
Next Steps and Implementation {#next-steps}
You’re separating from a parent company, or you’ve just acquired a carve-out. Here’s what to do now:
Immediate Actions (This Week)
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Hire an interim CTO. This is the most critical hire. Look for someone with carve-out experience, operational excellence, and the ability to move fast. If you can’t find a full-time interim CTO, hire a fractional CTO from a firm like PADISO that specialises in this work.
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Schedule a kickoff meeting. Get the CEO, CFO, COO, and interim CTO in a room. Align on the separation timeline, TSA strategy, and success criteria.
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Create a RAID log. Start tracking risks, assumptions, issues, and dependencies. Update it weekly.
Month 1
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Complete the technology audit. Inventory all systems, infrastructure, data, and access. Document everything.
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Design the target-state architecture. Create a 10–15 page technical strategy that defines what you’re building and why.
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Negotiate TSA terms. Work with the parent company’s legal and IT teams to define the scope, duration, and cost of the TSA. Aim for 12 months maximum.
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Start recruiting the permanent CTO. Begin interviews and outreach. You want to hire by month 2.
Month 2–3
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Execute the build. Stand up cloud infrastructure, migrate identity, extract data, set up monitoring and logging.
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Hire permanent CTO and infrastructure lead. These hires are critical. Involve the interim CTO in the hiring process.
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Implement core security controls. MFA, encryption, logging, access control, incident response.
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Document everything. Architecture diagrams, runbooks, policies, procedures.
Month 4–6
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Harden and prepare for audit. Implement remaining security controls, collect audit evidence, train the team.
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Hire security lead or partner with external firm. You need dedicated security leadership for audit readiness.
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Test separation scenarios. Can you operate independently if the TSA ends? Test it.
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Begin audit process. Start SOC 2 Type I or ISO 27001 audit. Aim to be certified by month 6–9.
Month 6–12
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Achieve audit certification. Complete SOC 2 Type II or ISO 27001 audit.
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Hire individual contributors. Engineers, data engineers, DevOps specialists. Build the team.
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Modernise and optimise. Now that you’re stable, modernise legacy systems, optimise costs, and build new capabilities.
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Plan for TSA expiration. As the TSA approaches expiration, ensure you’re truly independent. Test all critical systems.
Resources and Support
You don’t have to do this alone. Consider:
- Interim CTO services: Firms like PADISO offer CTO as a Service for teams that need fractional technical leadership
- Security audit support: PADISO’s Security Audit service can help you get audit-ready in weeks, not months
- Technology due diligence: If you’re acquiring a carve-out, BCG’s guidance on technology due diligence is essential reading
- Carve-out expertise: StrataFusion’s Ultimate Private Equity Guide to IT Carve-Outs is a practical resource for PE-backed carve-outs
- M&A transformation: McKinsey’s M&A Insights and Deloitte’s M&A Hub have research on separations and transformations
Conclusion
A carve-out is a massive undertaking. You’re building a standalone business from scratch while operating a live business. It’s hard, it’s risky, and it’s expensive.
But it’s doable. Thousands of companies have done it. The ones that succeed share a common pattern: they hire an interim CTO on day 1, they plan the separation carefully, and they execute with discipline.
Your interim CTO is not a luxury. They’re a necessity. They’re the difference between a smooth separation and a disaster.
If you’re in the middle of a carve-out right now, your next step is clear: hire an interim CTO this week. Give them a 90-day mandate. Follow the playbook in this guide. By month 4, you’ll be operating independently. By month 6, you’ll be audit-ready. By month 12, you’ll be a standalone, secure, scalable business.
You’ve got this. Now go build it.