Do you have any technique to memorize these different types of divestitures? (Carve-Out, Spin-Offs, Split-Offs, Divestitures, Liquidation)
The only one that’s easy for me to remember is Liquidation.
What are the most significant differences between the other types? Can you group them easily?
I know spin-offs and split-offs are similar, but I can never remember the difference.
In spin off you give parent company share as the subsidiary share.
In split off you exchange parent company share with the subsidiary share.
In both you dont raise cash, just exchange shares.
Equity carve-out (partial spinoff) - separation without losing complete control (equity offered to public)
Spin-off - separate legal entity with its own management team and board of directors (prorata distribution of new co. shares to its existing shareholders)
Split-off : (spin off with an option) - parent company offers its shareholders the opportunity to exchange their shares in parent co. for new shares of a subsidiary
if there’s confusion with spin and splits, think of it this way.
split, divide. shareholders can choose one set of shares or another - hence the option to exchange shares. whether or not any choosing actually happens is irrelevant.
If your having trouble remembering make it weird! You won’t forget
“Carve Gold” to sell to “outsiders”
“Splitting”/Chopping meat and giving option to existing customer(shareholder) to decide which he wants.
Interesting!! I too have always had difficulty remembering the differences between an equity carve-out, spin off and split off. I’ve decided to memorize them just before the exam day.