Equity carve out

(redirected from Equity Carveout)

Equity carve out

Usually occurs when a company decides to IPO one of their subsidiaries or divisions. The company usually only offers a minority share to the equity market. Also known as carve out.

Equity Carve Out

The act or process of a company making an IPO on one of its subsidies without fully spinning off. During an equity carve-out, the parent company becomes majority shareholder and only offers a minority share to the market. This gives the subsidiary a degree of autonomy (such as its own board of directors) while still retaining access to resources at the parent company. Most of the time, an equity carve-out ultimately results in the parent company fully spinning off the subsidy. It is also called a partial spin off.
References in periodicals archive ?
A positive offer price revision, an equity carveout, or a reverse LBO have no affect on the level of post-IPO institutional ownership.
Other control variables include the log of market capitalization, share overhang, a measure of underwriter reputation, and dummy variables for venture capital backed, equity carveout, reverse LBO, and NASDAQ-listed deals.
The control variables in our regressions indicate that an IPO firm is more likely to be acquired if it is underwritten by a top tier investment bank, if it is an equity carveout, or if it lists on NASDAQ.
Lastly, in Model 4, we consider the impact of equity carveouts by interacting the equity carveout indicator with the M&A activity measure and each of the control variables.
Dummies for equity carveouts and reverse leveraged buyouts (LBOs), both of which are IPOs involving firms with a prior history as publicly traded entities, are included as controls.
Finally, equity carveouts are associated with less underpricing.
The groups we consider are IPOs backed by VCs compared to those that are not, firms in high-tech industries compared to all other industries, young firms compared to old firms, and equity carveouts compared to all other IPOs.
Relative to focused firms, issues by diversified firms are more likely to be equity carveouts and less likely to be in a High-Tech industry.
To control for this possibility, we include dummy variables for equity carveouts and reverse leveraged buyouts (LBOs).
New markets, new products, and new definitions excite a host of industries, and equity carveouts, spinoffs, and demergers are regular occurrences.
1999, "Long Term Returns from Equity Carveouts," Journal of Financial Economics 51, 273-308.
The sample proportions in Panel B show that NYSE IPOs are more likely to result from equity carveouts and reverse LBOs.