A divestiture that results in an operating unit becoming an independent company is a
A) sale of a line of business.
B) sale of a unit to existing management.
C) spin-off of an operating unit.
D) leveraged buyout.

Question

Quizplus · Accepted Answer

A spin-off of an operating unit results in that unit becoming an independent company, separate from its former parent company. A sale of a line of business or unit to existing management may result in it being run as a separate entity, but it remains under the ownership of the parent company. A leveraged buyout is when a group of investors borrow funds to purchase a company, which is not necessarily a divestiture or spin-off.

A Divestiture That Results in an Operating Unit Becoming an Independent