Although the parent often retains control in an equity carve-out, the shareholder base of the subsidiary may be different that that of the parent.

Question

Quizplus · Accepted Answer

In an equity carve-out, the subsidiary is partially spun off to create a separate entity, and the parent company retains control of the subsidiary. However, the shareholder base of the subsidiary may be different from that of the parent due to the sale of equity to new investors. As a result, the parent may no longer have a majority stake in the subsidiary and may have to answer to a new group of shareholders.

Although the Parent Often Retains Control in an Equity Carve-Out