Equity carve out

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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 ?
Since pure initial public offerings (IPOs) do not trade until the ex-date, equity carve-outs (partial IPOs) provide an opportunity to track the impact of initial and subsequent filings on parent company returns throughout the filing process from initial filing to first trade date.
An Examination of the Impact of Filings on Carve-out Parent Returns
Discussion includes corporate spinoffs, equity carve-outs, targeted stock offerings, bankruptcy, reorganizations and workouts, and downsizing programs.
Mergers, Acquisitions and Corporate Restructuring: Text and Cases, 2nd Edition
We examine the efficiency of initial public offering (IPO) pricing using a sample o[over 300 equity carve-outs from 1985 to 2009.
Does IPO pricing reflect public information? New insights from equity carve-outs
Hand and Skantz (1998) argue that issuing new shares in equity carve-outs can avoid tax liabilities that occur when a firm issues secondary shares (at a price above the firm's tax basis in the shares).
3 Taxes, LBOs, corporate restructuring, and organizational form
(1995) compared the information content of three mechanisms of restructuring: (1) equity carve-outs, which are public offerings of subsidiary equity; (2) spin-offs, which distribute subsidiary equity to the owners of the parent firm through pro rata stock dividends; and (3) asset sell-offs, which are sales of subsidiaries to third parties.
Information transfers from diverse corporate events: methodological issues and findings
In addition to providing clear intuition and real-life examples, this chapter also links academic research on management buy-outs, equity carve-outs, and tracking stock to the question of how best to align shareholder and manager interests.
EVA[R] and Value-Based Management: a Practical Guide to Implementation. (Book Reviews)
Spin-offs, equity carve-outs, and initial public offerings have slowed down from their heyday in the 1990s, but these transactions will surely come into vogue again, since they can create lasting value when done right.
Is it time to spin off? (Checklist)
The results suggest that equity carve-outs are an effective way for companies to exploit growth opportunities and increase shareholder value.
The appeal of the equity carve-out
The equity carve-outs in Tokyo work if the pricing of the U.S.
Cost of capital for industry and banks
US companies have used equity carve-outs (partial IPOs) as a reorganization tool for some time to unlock subsidiary values and to increase the parent's corporate focus or to create a pure play for the subsidiary.
An examination of the long-term results of acquired carve-out/spin-off combinations
In recent years, equity carve-outs, spin-offs, asset sales, and tracking stocks have been important methods of restructuring assets and financial claims of publicly traded companies.
An investigation of the gains from specialized equity claims
Between 1987 and 1994, ARGO, for instance, undertook three equity carve-outs, requiring in all at least 26 separate agreements to delimit the boundaries of the various businesses.
Doing the spin-out
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