GE case study video
3
independent public companies created
90+
countries with operations to manage
40,000
activities across the global deal
Delivering sustained outcomes while retaining trust in a historic brand
SITUATION
Splitting success: How PwC helped GE execute a historic transformation
Faced with the monumental opportunity of splitting into three separate companies, GE already had an experienced, trusted and battle-tested team and had successfully collaborated with PwC on past deals. Considering the scale of the project, GE knew that PwC was the right advisor to help drive success given PwC’s experience managing large-scale deal transactions. GE enlisted the firm to help them through the complex separation process.
The central challenge was enabling GE's teams to maintain focus on running the businesses — while simultaneously executing multiple spin-offs with minimal disruption. This required meticulous planning and coordination to reduce disruption to ongoing operations and increase success for the newly independent entities.
The sheer size of the separations— encompassing 40,000 execution actions across more than 90 countries — added another layer of intricacy, as each business needed to be self-sustaining to thrive as an independent public company from day one.
The scale and scope of these separations was immense and included workstreams focused on managing regulatory compliance, talent retention, maintaining customer and supplier relationships, separating IT infrastructure and enhancing financial and tax implications — just to name a few. This was especially true for GE as each new organization represented a significant enterprise that required bespoke strategies.
Three companies, three distinct purposes: GE HealthCare, GE Aerospace and GE Vernova
After the spinoffs, GE’s new companies would embark on a unique mission within each industry:
- GE Aerospace. Poised to invent the future of flight, lift people up and bring them home safely as a global aerospace leader in attractive propulsion, services and systems sectors.
- GE HealthCare. Driven to create a world where healthcare has no limits: Digitizing healthcare, driving productivity to improve the lives of patients and creating meaningful efficiencies for providers, health systems and researchers around the world.
- GE Vernova. Set to electrify the world while reducing carbon emissions, helping usher in a new era of energy that is more sustainable and innovative.
With an understanding of GE’s lean operational culture, PwC was nimble in adapting to this mindset while leveraging its deals-driven ethos of turning opportunity into growth. Together, the teams set out to empower each new company to quickly establish itself as an industry leader, ready to compete in its respective market.
SOLUTION
Solving a complex puzzle
Achieving successful completion of a large, high-stakes deal requires breaking it down into manageable, smaller tasks — which is exactly what GE and PwC did.
Helping GE with a transact-to-transform strategy — an approach that empowers companies to reinvent their business models and unlock sustainable growth — required a combination of rigor, continuity and governance. The project included setting up new public companies, restructuring legal entities and separating historically shared services like research and development (R&D), human resources (HR), cloud and digital infrastructure and finance. GE's focus on lean and continuous improvement was key to maintaining high standards throughout.
Acting as an overall separation manager and advisor, PwC helped manage costs by addressing stranded costs, conducting cost assessments and executing allocations through more than 700 Transitional Service Agreements (TSAs) — contracts that outline temporary support services. On top of that, the team helped set up financial systems for the three new companies, helping enable strong, independent financial infrastructures for each. The team also evaluated key accounting decisions, performed 2,000 legal entity separations and allocated more than $4 billion in shared assets and liabilities across all three organizations.
Building integrity into regulatory and tax strategy
The complex process of separation depends on meticulous planning and execution to facilitate a smooth transition. The importance of early tax-related planning during the separation can’t be underestimated. Strategic tax decisions can influence the structure and timeline of separating legal entities — which is critical to comply with strict regulatory requirements and maintain deal value. Meanwhile, protecting intellectual property (IP) and mitigating potential liabilities is equally important.
The GE and PwC teams tackled tax strategy first because it trickles through every facet of the business, informing project deadlines. The teams then took great care handling governance relating to IP, trademarks and patents, while addressing permitting and legacy liabilities. Compliance and operational integrity were considered at every turn.
Throughout the process, the PwC team automated contract review and metadata extraction, saving countless hours across thousands of legal documents. Real-time visual data flows were created to provide accessible and flexible data for both teams. PwC's global network in 149 countries provided support with advice on legal, tax and other issues, enabling decision making and preventing delays.
Focused financials for a seamless transition
The team needed to create carve-out financial statements across the multinational business that took into account commingled legal entities and balances, data from 48 Enterprise Resource Planning (ERP) systems and multiple auditors.
Together, the teams were able to leverage their historical knowledge of the business, along with PwC’s proprietary algorithms, to automate production of the carve-out financial statements and Form 10 filings with the U.S. Securities and Exchange Commission (SEC). SEC-compliant non-GAAP metrics and key performance indicators (KPIs) helped tell each industry-specific equity story, meeting peer and analyst expectations with a successful registration with the SEC.
The carve-out data models were key to providing a single source of truth for financial information in real time. This data was not only used for financial reporting purposes, the dynamic models also helped empower global stakeholders to derive insights that contributed to scenario planning and strategic decision making.
Human capital: From new roles to new beginnings
PwC helped GE fill new roles and transfer about 12,000 employees across the three new entities within 50+ countries. This meant carefully planning transition timing, tackling benefit plan location complexities and making sure PwC supported GE’s teams across international markets during the transition.
The spin-offs also required dismantling a centralized shared services group and recreating the fit for purpose processes, systems and teams within each new organization while keeping everything aligned and efficient. Together, the team successfully set up 75 benefits and 95 payroll systems across the global footprint of the three new companies. With PwC’s help, the GE team rolled out upskilling efforts, allowing existing employees to tackle new challenges. The team implemented new HR systems to handle payroll and benefits separation effectively. Throughout these processes, the team maintained a strong focus on preserving GE's company culture and workforce stability.
Marketing and internal communications: Maintaining trust and leaning on tech
Marketing and internal communications efforts were vital to provide clear, consistent messaging, maintain stakeholder trust and support a more seamless transition for employees and customers. PwC worked hand in hand with GE to coordinate and review new employee handbooks, helping GE focus on maintaining a positive employee experience, mapping out current-state processes and drafting day-one guides that included information on everything from separation strategy to guidance on new email addresses and cloud collaboration tools.
Digital technology: Unknotting IT
Within digital technology — which GE calls its IT vertical — PwC helped evaluate, separate and then re-implement the systems, platforms, applications, network and cloud infrastructure that kept the business moving. Simply untangling a standalone piece of digital technology wasn’t an option given the thousands of software systems running congruently. GE and PwC worked together to develop a cloud infrastructure strategy that leveraged modern workplace solutions to enable compliance and future readiness.
The team simplified IT infrastructure and distributed the separation process across 48 ERPs and eight data centers. This also involved contract separation, including collecting and reviewing 200k+ supplier documents and using AI and analytics tools to review more than 7,000 contracts, identifying clauses for easy transitions, preparing for negotiations and, when necessary, determining alternative actions.
Junction: The digital nerve center formed a foundation for success
At the core of everything was Junction, a PwC-developed asset and digital “nerve center” leveraged by both teams for decision making and insights. Junction served as a central hub – and single source of truth – for global separation information across the GE portfolio. To maintain focus on project goals, PwC tailored the platform to align with GE's operational workflows and strategy.
Junction tracked new data in real time by combing disparate information streams — including finance and HR — enabling stakeholders to access reliable information and reporting with just a few taps. Junction also showed GE decision makers a view of dependencies, meaning what one function needed from another to complete their separation activities.
Custom decision-making dashboards saved GE thousands of hours in meticulous project tracking. As an added benefit, Junction was easy to use because it was built with Microsoft Cloud technology and incorporated tools that employees were already familiar with. The cloud-based tool was a huge collaborative asset, helping GE and PwC’s integrated teams — from senior leadership to those actively supporting operations across more than 40 global workstreams in over 90 countries — identify high-risk areas and quickly remedy them.
RESULTS
GE’s new era of innovation
Rigor, agility and governance were key to hitting each milestone during the spin-offs. Additionally, a strong focus was placed on adopting GE’s lean methodology — a hallmark of its culture and a unique operational strategy focused on continuous improvement and increasing productivity to deliver the highest value to customers. Throughout the separations, GE’s lean approach improved efficiency and helped promote consistent quality across all functions and business units.
The entire project — which encompassed coordinating and managing more than 40,000 execution actions across 90+ countries — benefited from clear deadlines and KPIs set at the very beginning, allowing for precise progress tracking and adherence to critical performance standards. In a large separation, governance is essential, and PwC leveraged its worldwide professional network to help make sure that every detail was considered across workstreams and industries.
GE’s insights and strategy were invaluable in navigating the new business landscape, while PwC brought an in-depth, global understanding of separation management to help validate that all parties were aligned.
Three new companies
Today GE has strategically separated into three distinct companies, each focused on specific growing sectors: aviation, healthcare and energy. This move allows each entity to hone its skills and drive innovation within its industry. This agile approach also means each company can better serve modern customers by delivering specialized, tech-driven products and services tailored to their unique — and ever evolving — needs.
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