Which one of the following statements is correct?
A) A spin-off frequently follows an equity carve-out.
B) A split-up frequently follows a spin-off.
C) An equity carve-out is a speciﬁc type of acquisition.
D) A spin-off involves an initial public offering.
E) A divestiture means that the original ﬁrm ceases to exist.

Question

Quizplus · Accepted Answer

A spin-off often follows an equity carve-out. An equity carve-out is when a parent company sells a portion of its ownership in a subsidiary to the public. A spin-off is when the parent company distributes the remaining ownership in the subsidiary to its own shareholders as a separate standalone company. So, spin-off can be considered as a subsequent outcome of an equity carve-out.

Which One of the Following Statements Is Correct