Divestitures: company gives away control of a subsidiary and gets ccash in return Equity carve out: company creates a new company out of the subsidary and gives away shares to outside investors via an IPO. What does it get in return–is it cash or something else? I am asking because a Q bank question said which of the following would a company use to get a near term cash infusion and divestiture was answer and equity carve out was not so I want to know why carve out was wrong. Thanks.
the company gets cash in return with an equity carve out…I am guessing Schweser is probably looking for divestiture as it asked for ‘near term cash infusion’. divestitures can done in a month even with an auction process if need be…IPO’s take longer. nonetheless, a poorly worded question by schweser.
Because there is no time wasted by floating an IPO - the key here is near term cash infusion.
makes perfect sense, thank you both
Think of an oil company selling a property but not the whole company and you will always remember what a divestiture is 
TheAliMan Wrote: ------------------------------------------------------- > Think of an oil company selling a property but not > the whole company and you will always remember > what a divestiture is Is this really a divestiture? Seems more like an asset sale to me.
No you’re correct. Scratch what I said.