A billion dollar successful

separation
A multi-billion-dollar energy company successfully launches an MLP
IPO and separates into two new companies that are ready to run on
Day One.

Executive Summary
Client challenge:
To plan and execute a Master
Limited Partnership (MLP) and a
major spin-off by:
 Evaluating the costs and challenges of
various MLP and separation plans.
 Addressing the operations and
transaction complexities, industry
regulations and tax laws as well as
NYSE and SEC requirements.
 Preparing for the possibility of
business disruptions.
PwC’s solution:
Helping to design and implement an
MLP formation and operations
separation plan across all
departments and workstreams by:
 Working with department heads on
separation analysis and execution,
financial modeling, and transaction
planning.
Power & Utilities  Using a minimal-risk “clone and go”
May 2016 approach to set up the new entities.
 Dealing with the tax modeling and
public offering associated with
 Optimizing Deals creating an additional MLP.
 Aligning costs with business strategy Impact on client’s business:

 Growing and creating a competitive advantage  The MLP raised over $1 Billion.

 Securing assets  The billion-dollar spin-off occurred

 Transforming human capital
 Navigating risk and regulatory complexity
on time and was met enthusiastically
by investors.
 There were no post-separation
business disruptions.
 The new entities complied
with all financial, tax and
industry regulations.
Client challenge: Plan and
execute an MLP IPO and a
major spin-off
As a Fortune 500 diversified energy
and utility company that delivers
energy to millions of customers began
planning to separate into two highly
focused multi-billion-dollar energy
infrastructure companies and form an
MLP, its leaders knew how hard the
process would be.
Operations of all the business units
were integrated and supported by a
shared services organization and an
ERP platform at the corporate parent
level, so the company would need to
set up new parallel infrastructures for
IT, finance, human capital, and more,
all while navigating the heavily
regulated landscape of the energy and
utility industries.
To avoid a messy split, the company
would have to evaluate multiple
separation options in terms of speed,
cost, and operational impact and then
get right down to the business of
making it happen, aiming toward a
post-separation Day One with
minimal business disruption and
satisfied shareholders.
PwC’s solution: Helping to
design and implement a
separation plan across
all departments
and workstreams
The company’s CEO, CFO, and other
C-level executives knew PwC was a
leader in Operations Separation
Planning and Execution as well as
MLP and spin-off Transactional
Planning and Execution. PwC teams
had done work advising companies in
the past on spin-offs and setting up
MLP’s and dealing with the sweeping
tax and regulatory issues that
inevitably emerged.
2 Power & Utilities
This time around, PwC began with a
small Divestitures team that
connected with VPs of Finance, HR,
IT, Legal, and Supply Management to
begin work on Operations Separation
Analysis, Organizational Design,
Transaction Planning, Financial
Modeling, and Project Management.
Together we developed initial
thoughts on the costs and challenges
of spinning off what amounted to 20%
of the company, preparing briefings
that leadership could take to their
board in just six weeks.
After Board approval, we expanded
our team to include Organization &
Human Capital, Finance, IT and
Application Strategy, and Supply
Chain advisors to further progress the
work of operations and transaction
planning and costing. It was also
critical to tap into the knowledge of
our Power & Utilities industry
professionals and to bring in our tax
advisors to analyze the tax impacts of
the MLP and upcoming separation.
Within three months we were ready to
move into the implementation phase.
Having decided to take a “clone and
go” approach setting up to the new
entities, a strategy that would reduce
risk and help facilitate smooth post-
separation operations, we helped the
client execute on all the challenges
across the multiple departments and
business units.
The team made sure that 110 critical Day One
activities were accomplished on time…
…and were met with enthusiasm by investors,
who responded well to the billion-dollar
offering and pushed the price up more than 16
percent on the first day of trading.
That meant providing the overall
program leadership and transition
support, gearing up for Day One
support across 12 back-office
workstreams, supporting change
management and communications for
Day One activities, and sorting out
over 300 transition services to ease
the new entities into the future.
For several months, PwC’s integrated
cross-discipline team continued its
work to assist the company with its
separation:
 IT: Orchestrated the separation of
data access and common systems
and vendors.
 HR: Determined the appropriate
way to deploy talent after the
split, identified gaps, and assisted
in recruiting and staffing.
 Finance: Incorporated additional
financial planning, forecasting,
and reporting responsibilities into
the Business Unit Corporate
Finance team and evaluated the
financial impact of new
governance.
 Tax: Tackled the uniquely
complex tax impacts associated
operations separation and with
creating an MLP, an entity
that must meet very specific
IRS criteria.
May 2016
  Governance: Waded through the
challenges in standing up a new
As the company’s CEO Board of Directors.
told us, “There aren't
enough superlatives for  Investor Relations: Successfully
launched a public offering of MLP
the PwC Team. You have units, spun-off shares of the
been absolutely separated entity to shareholders
outstanding, the and setup framework for ongoing
investor communications
personification of and reporting
execution excellence!”
 Legal: Addressed the necessary
legal requirements for the newly
public companies and completed
the necessary SEC filings.
By the time the separation was ready,
we had helped the company support
its MLP IPO pricing with compelling
financial data and had worked with
them to vet the aspects of the newly
separate companies, from financials to
operations, to help establish that there
were no surprises or potential issues
that might derail its strategy.
Impact on client’s
business: A smooth and
successful separation
The team made sure that 110 critical
Day One activities were accomplished
on time, paving the way for a smooth
launch with minimal disruption. The
transactions closed in compliance
with regulatory requirements and
were met with enthusiasm by
investors, who responded well to the
billion-dollar offering and pushed the
price up more than 16 percent on the
first day of trading. By working
alongside company leaders to realize
their strategic vision across the entire
deal spectrum from planning through
execution, it became a straightforward
exercise to steer the deal toward a
successful conclusion.
Today, the two newly formed entities
are transitioning smoothly from post-
separation mode to steady-state
operation. As the company’s CEO told
us, “There aren't enough superlatives
for the PwC Team. You have been
absolutely outstanding, the
personification of execution
excellence!” And today our work
continues, as PwC teams provide
additional advisory services to the
new entities, helping them navigate
the ever-changing regulatory
environments and uncover new
growth opportunities for the future.

For more information, please visit

www.pwc.com/us/consulting or contact

Carina Markel Mark Hoffman

Principal Principal
+ (312) 298-3627 + (281) 451-8997
Carina.markel@pwc.com mark.hoffman@pwc.com

Lawson Smith Jennifer Farkas

Director Director
+ (312) 298-3259 + (917) 689-3557
lawson.smith@pwc.com jennifer.a.farkas@pwc.com
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