What is a corporate spin-off?
What is a Corporate Spin-off? Definition, Strategy, and Examples Corporate Spin-offs: Definition and Strategy A corporate spin-off is a strategic decision by an organization's managers to form a new, independent organization for a specific unit of the company. Physically, the unit might move to a new location or stay in the same building, but operationally, it begins to function under a different corporate entity. How it Works: Compensation and Shares In a standard spin-off, the owners of the parent firm typically receive shares in the new spin-off company. This serves as compensation for allowing the unit to leave the parent's portfolio. For public companies , the spin-off receives a new ticker symbol and trades independently from the parent company's stock. This allows the market to value each entity separately, deciding if the split was a good idea for one, both, or neither. Why do Companies Spin-off? (Strate...
