Anne,

All too many times over the past decade...

The first place to start is with a conversation with the attorney working
out the deal terms. The deal terms will generally dictate some aspect of
what happens to books and records. You also have to give consideration to
which organization will be the "remainco" and which company will be the
"spinco". "Remainco" is generally the company that provides continuity with
the prior organization. "Spinco" is the wholly new company. That is
important because it determines which organization maintains the legacy
documentation from the corporate parent. The deal terms also typically
provide for an agreement for each company to support the other in the event
of litigation, and oftentimes will provide for a process to repatriate
records belonging to one organization or the other (this happens when one
company finds something that rightfully belongs to the other). There may
also be a retention of records provision as well as some sort of
destruction of records notice provision.

Now it gets interesting. The organizations may also work out a variety of
TSAs (temporary services agreements). These are most often services being
provided by Remainco to Spinco, but can be the other way around. Lots of
things can go in to these agreements, but Records is most often affected by
agreements regarding central files or electronic document management
systems, particularly when there isn't enough time to physically separate
the records. In most cases, Spinco is entitled to operational records only,
although in some instances historical / legacy records will be included if
the business unit was quite distinct from other parts of the legacy
organization. This can get sticky when it comes to products or businesses
that are orphaned.

Assuming that the Spinco business units are reasonably distinct, it is
typical to make an effort to identify the records that are most associated
with that business. In my past history, we looked at the post split chart
of accounts and since hard copy records in offsite storage were paid for by
cost centers, it was fairly easy to identify which records belonged where.
We would then try to get the records center vendor to clone the existing
contract for Spinco and then assign records to that account. There were
always some surprises, so it was important to have a good relationship with
the people in Spinco responsible for records.

Splitting the EDMS is a little more interesting. Depending upon how the
system is set up, it may be as simple as validating documents in the Spinco
business units as belonging to Spinco. We would also make an assumption
that documents associated with Spinco employees belonged to Spinco unless
the employee reassigned the documents elsewhere. Once that is done, you
have to figure out how to migrate the documents. If Spinco will have the
same EDMS, one approach would be to clone the system -- perhaps the system
already has mirroring established in order to ensure availability, so the
cloning may be done already. Once the systems are separated, Spinco can go
about purging Remainco documents. At the point where Spinco has completed
that effort and is satisfied that they have their documents, Remainco can
then purge the Spinco documents. It is typical that there may be some
orphaned documents in each system, so close coordination is required.

Corporate historical archives are a whole other matter that often results
in a longer term agreement between organizations.

I'm sure there are a million nuances that can come up, depending upon the
nature of the transaction, but these are the ones that I've spent a fair
amount of time on.

Patrick Cunningham, CISM, FAI

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