Which one of the following statements is correct?
A) An equity carve-out frequently follows a spin-off.
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) Split-ups may unlock value within a firm.

Question

Quizplus · Accepted Answer

Split-ups, which involve separating a company into two or more independent entities, can unlock value within a firm by allowing each unit to focus on its core competencies and potentially increase efficiency. The other options are incorrect. An equity carve-out is a specific method of raising capital in which a company sells a portion of its subsidiary to the public. A split-up is different from a spin-off in that it involves creating multiple independent entities rather than just one. And a spin-off does not necessarily involve an IPO, as the new company may simply distribute shares to existing shareholders.

Which One of the Following Statements Is Correct