Define and explain the differences between: - Carve-Outs - Divestitures - Spinoffs - Split-Offs

Define and explain the differences between:

- Carve-Outs

- Divestitures

- Spinoffs

- Split-Offs

Solutions

Expert Solution

A carve out involves separating a subsidiary or a business unit from the parent and selling it to investors through an intial public offering. This may be done for various reasons one of which may be separating two different types of businesses of the firm into two separate companies. The main aim of a carve out is to generate cash for the company.

A divestiture can include a broad range of transactions whose main aim is partial or full disposal of a subsidiary or business unit by closure or by selling it to other parties.

Unlike a carve out, a spin off involves separating a existing business unit of a firm and distributing shares of the unit to the existing shareholders on a prorata basis. So the main aim here is to separate different businesses and not generate cash. A spin off is generally not taxable whereas a carve out is.

In a spin off, shareholders get the shares of the newly created firm while holding on to their existing shares of the original firm. But in a split off, they have to choose between the original and the newly created firm.

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

4. Which of the following statements concerning group life insurance carve-outs is correct? A. They are...

4. Which of the following statements concerning group life insurance carve-outs is correct? A. They are most likely to be used for low-income, hourly employees. B. They are most often used for union employees. C. They are usually funded with term insurance. D. They are fully deductible to the employer as long as the employee's overall compensation is reasonable.

Divestitures: 1.What happens when a company engages in an equity carve out? 2. How does the...

Divestitures: 1.What happens when a company engages in an equity carve out? 2. How does the subsidiary account for the equity carve out transaction? 3. Does the parent record anything when the subsidiary engages in an equity carve-out transaction? 4. What happens when a company engages in a spin-off? 5. How does the parent account for a spin-off transaction? 6. Does the subsidiary record anything when a parent engages in a spin-off transaction?

With the aid of sketch, explain the main differences between window type air-conditioner and split type...

With the aid of sketch, explain the main differences between window type air-conditioner and split type air-conditioner. Why the window type and split type air-conditioner is not commonly used for high rise commercial building?

Many companies use split-offs as a means to unlock shareholder value. The split-off effectively splits the...

Many companies use split-offs as a means to unlock shareholder value. The split-off effectively splits the company into two pieces, each of which can then be valued separately by the stock market. If managers are compensated based on reported profit, how might they strategically structure the split-off? What corporate governance issues does this transaction present?

Discuss the difference between validity and reliability. Define a group and explain the differences between primary...

Discuss the difference between validity and reliability. Define a group and explain the differences between primary and secondary groups.

Define price and value and explain the similarities and differences between the two What is the...

Define price and value and explain the similarities and differences between the two What is the law of demand and what are two reasons why it’s valid?

Define and briefly explain the differences between the concepts “Plant-within-aplant” and “Straddling”.

Discuss the differences between a stock dividend and a stock split. Why are these actions important...

Discuss the differences between a stock dividend and a stock split. Why are these actions important to stockholders?

What are the differences between Natural Selection & Sexual Selection? Define and explain each (including the...

What are the differences between Natural Selection & Sexual Selection? Define and explain each (including the basic principles of Evolutionary Changes and the concepts of Natural Selection) with examples from the readings and class.

Explain the differences between primitive and reference data types. Define the scope of a variable (hint:...

Explain the differences between primitive and reference data types. Define the scope of a variable (hint: local and global variable) Why is initialization of variables required. Differentiate between static, instance and local variables. Differentiate between widening and narrowing casting in java. the following table shows data type, its size, default value and the range. Filling in the missing values. TYPE SIZE (IN BYTES) DEFAULT RANGE boolean 1 bit true, false Char 2 ‘\0000’ to ‘\ffff’ Byte 0 Short 0 -215...

Subjects