Sallie Mae 2013 Annual Report Download - page 48

The actions required to implement the complete separation of our current businesses into two, distinct,
publicly-traded entities have and will continue to take significant management time and attention and could
disrupt operations.
The complete separation of our existing organization into two publicly-traded companies will require
significant ongoing execution and administration at all levels of the internal organization. A team of employees is
charged with implementing the Spin-Off reporting frequently to management on status and progress of the
project. For the foreseeable future, high-level employees and management will continue to dedicate a significant
amount of time to the implementation of the Spin-Off to ensure that it is carried out timely and appropriately.
The time and attention that high-level employees and management dedicate to the Spin-Off could limit the time
and attention spent on managing the business which could disrupt current and future operations.
SLM BankCo will incur significant costs in connection with being a stand-alone company and lose the
advantage of our larger size and purchasing power.
SLM BankCo will incur significant costs in connection with the transition to being a stand-alone public
company and implementing the Spin-Off, including costs to separate information systems, accounting, tax, legal
and other professional services costs and recruiting and relocation costs associated with hiring key senior
management personnel new to SLM BankCo. In addition, the businesses that will be operated out of SLM
BankCo have historically taken advantage of our current size and purchasing power in procuring goods and
services. After the Spin-Off, as a separate independent entity, SLM BankCo will no longer be able to rely on this
joint purchasing power and, as a result, it may be unable to obtain goods and services from third-party service
providers and vendors at prices or on terms as favorable as those it obtained prior to the Spin-Off. Furthermore,
prior to the Spin-Off, the SLM BankCo businesses have obtained services from, or engaged in transactions with,
our affiliates under intercompany agreements. NewCo and its affiliates will provide services for SLM BankCo
and its affiliates following the Spin-Off under a transition services agreement for a transition period and
potentially thereafter. The fees charged by NewCo and its affiliates for the provision of these services to SLM
BankCo and its affiliates may be higher than those charged prior to the Spin-Off. All of these factors will result
in costs that are higher than the amounts reflected in historical financial statements which could cause SLM
BankCo’s profitability to decrease.
SLM BankCo may not achieve some or all of the expected benefits of the Spin-Off, and the Spin-Off may
adversely affect its business.
SLM BankCo may not be able to achieve the full strategic and financial benefits expected to result from the
Spin-Off, or such benefits may be delayed or not occur at all. The Spin-Off is expected to provide the following
benefits, among others: (i) a distinct investment identity allowing investors to evaluate the merits, performance,
and future prospects of SLM BankCo separately from NewCo; (ii) cash flows significantly in excess of preferred
stock dividend and debt service obligations; (iii) more efficient allocation of capital for SLM BankCo and
NewCo; (iv) reducing the likelihood SLM BankCo is designated a systemically important financial institution;
and (v) a separate equity structure that allows direct access by SLM BankCo to the capital markets and the use of
SLM BankCo equity for acquisitions and equity compensation.
SLM BankCo may not be able to realize these and other anticipated benefits for a variety of reasons,
including, among others: (a) the Spin-Off will continue to require significant amounts of management’s time and
effort for the foreseeable future, which may divert management’s attention from operating SLM BankCo’s
business; (b) following the Spin-Off, SLM BankCo may be more susceptible to market fluctuations and other
adverse events than if it were still a part of us as a whole; (c) following the Spin-Off, SLM BankCo’s business
will be less diversified than our business prior to the Spin-Off; and (d) other actions required to separate SLM
BankCo’s and NewCo’s respective businesses could disrupt SLM BankCo’s operations. If SLM BankCo fails to
achieve some or all of the benefits expected to result from the Spin-Off, or if such benefits are delayed, the
business, financial condition and results of operations of SLM BankCo could be adversely affected and the value
of its stock could be impacted.
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