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Welcome to KSMC Double Klick, your bi-weekly briefing on M&A, finance, and AI innovation.

Let's deep dive into today’s topics.

Warm regards,
Kapil Sukhija
Founder, KSMC

📊 Deal Strategy Deep Dive

Carve-Out Strategies In Deals

Carve-out strategies separate non-core business units from a parent (RemainCo) to sell as standalone entities (CarveCo). Structures range from full standalone separation to partial standalone with Transition Services Agreements (TSAs), synthetic standalone where financials are presented as independent but operations remain embedded, or integrated models with extended shared services arrangements.

In mid-market M&A, carve-outs are a rising share of deal flow as corporates divest non-core units and PE firms deploy record dry powder into complex assets.

The Challenge

Sellers face real upfront costs to set up standalone IT, HR, and finance systems for the CarveCo, plus board timeline pressure. Buyers deal with incomplete standalone cost baselines and allocated overhead that may or may not persist post-close. Common pitfalls include:

• Ambiguous perimeters (unclear scope of what transfers) that trigger buyer re-trades during diligence

• Confidentiality breaches during the sale process that hurt employee retention and customer trust

• Regulatory delays in cross-border deals from antitrust, foreign investment reviews, and sector-specific bodies

Total separation costs (IT, HR, legal entity setup, rebranding) typically run 1% to 5% of the divested business's revenue, and can be higher for complex, multi-jurisdictional carve-outs.

Real Deal Example

In October 2025, French industrial group LISI (Euronext: FII) closed the carve-out of its LISI Medical division to SK Capital Partners for a net sale price of €270.4 million. The division was rebranded Precera Medical and relocated its headquarters from France to Big Lake, Minnesota, US on close.

LISI Medical was a medical device CDMO with €185.3 million of 2024 revenue, operating four sites across France and the US. The deal ran roughly four months from exclusive negotiations to close.

LISI retained a 9.988% minority stake plus an earnout tied to SK Capital's eventual exit, bridging valuation without adding debt. The Day 1 headquarters relocation signaled a clean operational break rather than a prolonged TSA dependency.

Success Factors

• Define the CarveCo perimeter before going to market. Pay for a separation diagnostic if the target has never been run as a standalone P&L

• Rebuild the P&L at a true standalone cost base

• Use rollover equity or earnouts to bridge valuation gaps. A 5% to 15% minority rollover keeps seller interest aligned without taking up the buyer's debt capacity

• Cap TSAs at 6 to 18 months, priced at cost plus 5% to 10%, with the right to exit early once the buyer's systems go live

• Build the working capital peg on carve-out adjusted balances that strip intercompany accounts

• Price in one-time separation costs and who pays them in the LOI, not the SPA

Question?: Have you navigated ambiguous perimeters in a mid-market carve-out? Share your approach to pre-LOI diligence and TSA scoping.

🌍 Global Pulse

What Anthropic's Mythos Means for Deal Infrastructure

Anthropic announced on April 7 that its new AI model, Mythos, will not be released publicly. Not because it fails. Because it works too well.

Mythos can find and exploit security flaws across operating systems and the cryptographic software underpinning e-commerce and financial networks. Per Anthropic, it surpasses all but the most skilled humans, with minimal human input. OpenAI followed with its own closed model, GPT 5.4 Cyber.

Access runs through Project Glasswing, a 12-member initiative including Apple, Google, and Nvidia, now expanding to 40 more digital-infrastructure organizations to harden critical software before similar capability goes mainstream.

Testing by the AI Security Institute showed Mythos model has reportedly found thousands of high or critical-severity flaws.

Researchers lean cautiously optimistic long-term. The near-term risk sits in the gap between how fast attackers weaponise flaws and how fast defenders patch them.

Why This Matters for M&A

For software, SaaS, and fintech targets, the shift in attacker capability should sharpen technical diligence scope, historical incident review, and R&W coverage pricing. For industrial and consumer targets running embedded or connected software, unmaintained code is a real tail risk buyers should price into post-close remediation budgets.

Source: The Economist, “Examining the Mythos”.

🤖 AI Tools Spotlight

Prompt Cowboy

Bad prompts waste more time than they save. You type a half-formed instruction, the AI gives you something generic, you rewrite, and twenty minutes later you are still fixing the output instead of using it.

Prompt Cowboy fixes the input side. Paste a rough idea, and it rebuilds it as a structured prompt with context, role, and format baked in. Drop that into ChatGPT, Claude, or Gemini and the first response is usually close to what you actually wanted.

What The Tool Does?

Takes a one-line idea and turns it into a properly framed prompt. Handles standard prompts, reasoning prompts, deep research prompts, and custom agent setups. Accepts an image and pulls a reusable prompt out of it. Works across the major LLMs without needing to re-tune for each one.

Why It Matters

The value shows up when you stop writing prompts from scratch and start building a library the whole firm pulls from. For a boutique running lean, that compounds fast.

Explore the tool here.

💭 Dealmaker’s Quote

“Culture should be assessed first because it shapes every other integration decision you make.”

— Alpha Apex Group, Culture Audit Framework, 2026

🏢 About Us

KSMC is a boutique consulting firm founded by Big 4 alumni driven by an entrepreneurial and innovative vision. We provide comprehensive M&A Advisory Services; CFO Advisory; and Bookkeeping and Accounting Services. Our expertise and network spans the complete transaction lifecycle, from financial due diligence (QoE reviews) and business valuations to full sell-side mandates, serving middle-market clients across industries in US, Canada, UAE, UK, India, Puerto Rico, and Botswana.

Know more and reach out to us here.

Disclaimer: This newsletter is provided for informational purposes only and does not constitute any form of advice. We do not have any sponsorship, affiliate, or commercial arrangements with any companies, tools, or services mentioned in this newsletter. All examples and case studies are based on publicly available information and are included for educational purposes only.