In 2014, the coalition government’s Transforming Rehabilitation reforms led to the wholesale restructuring of probation services in England and Wales. As part of this reconfiguration of probation services, more than half of the employees of public sector Probation Trusts were transferred to 21 new Community Rehabilitation Companies (CRCs) set up to manage medium- and low-risk offenders and destined for sale in the criminal justice marketplace. This article presents the findings of an ethnographic study of the formation of one CRC, with a specific focus on the construction and negotiation of identities. We identify a number of key themes, prominent among which is ‘liminality’: i.e. the experience of being betwixt and between the old and the new, the public and the outsourced. Other themes discussed in the article include separation and loss, status anxiety, loyalty and trust, liberation and innovation.