Spin-Off

Description of Spin-Off. Explanation.

Definition Spin-Off. Description.

A Spin-Off is a form of corporate divestiture, whereby a subsidiary, division or strategic business unit becomes an independent company. Normally, shares in the new organizational entity are distributed in the form of a special stock dividend to the shareholders of the parent company on a pro rata basis. However see Leveraged Buy-Out.

A frequent reason for considering a Spin-Off is that a product developed by the R&D department that does not fit in the Core Competence of the corporation, or to streamline the parent organization. A Spin-Off can also be advantageous from a strategic point of view in that two new companies can each focus on their core business. Also, from a financial point of view, the two firms may be worth more than the sum of them.

Compare with: Leveraged Buy-Out  |  Management Buy-Out  |  Divestiture  |  Exit Strategy  |  Parenting Advantage  |  Parenting Styles  |  Growth Phases  |  Joint Venture  |  Special Purpose Vehicle  |  Strategic Alliance  |  Synergy

Return to Management Hub: Change & Organization  |  Finance & Investing  |  Strategy

More on Management  |  Return to Management Dictionary  | 

End of description Spin-Off. An explanation.