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 ?
We also discuss the dimensions on which Targeted Stock, spin-offs, equity carve-outs, and dual class common stock differ, thus highlighting management considerations when choosing among the various forms of equity reorganization.
Rearranging residual claims: a case for targeted stock
Schipper and Smith (1983 and 1986) document positive market reactions to the announcements of both equity carve-outs and spin-offs of corporate as sets.
The choice of going public: spin-offs vs. carve-outs
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
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
For a sample period 1980 through 1991, the authors found that equity carve-outs were associated with significantly negative abnormal returns to other industry members.
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.
Cost of capital for industry and banks
With CHC's current market capitalization under $400 million, it is easy to understand that these planned equity carve-outs may well unlock the true value of these entities and enhance the investments our shareholders have made in Computer Horizons Corp.
Computer Horizons Plans Two Subsidiary IPOs
Thus, it is possible that share overhang may be systematically different for equity carve-outs as opposed to traditional IPOs.
Information asymmetry and the cost of going public for equity carve-outs
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