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.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

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.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
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).
This difference may be particularly relevant for our analysis of equity carveouts. For example, parent firms may be encouraged to retain certain portions of carved-out firms in order to take advantage of favorable tax issues or for reporting purposes.
(22.) Vijh, A., "The Positive Announcement-Period Returns of Equity Carveouts: Asymmetric Information or Divestiture Gains," Journal of Business (January 2002), pp.
New markets, new products, and new definitions excite a host of industries, and equity carveouts, spinoffs, and demergers are regular occurrences.
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.
Vijh, A., 2002, "The Positive Announcement-Period Returns of Equity Carveouts: Asymmetric Information or Divestiture Gains?," Journal of Business 75 (Forthcoming).
The sample proportions in Panel B show that NYSE IPOs are more likely to result from equity carveouts and reverse LBOs.