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Carve-out (Equity Carve-Out)
What does it mean?
1. Sometimes known as a partial spinoff, a carve out occurs when a parent company sells a minority (usually 20% or less) stake in a subsidiary for an IPO or rights offering.
2. Where an established brick-and-mortar company hooks up with venture investors and a new management team to launch an Internet spinoff.
In Other Words...
In most cases the parent company will spinoff the remaining interests to existing shareholders at a later date when the stock price is much higher.
Also known as a "carveout" or an "equity carve out."
Related Links
IPO Basics Tutorial - What's an IPO, and how did everybody get so rich off them during the dot-com boom? We give you the scoop.
Related Terms
Spinoff | Split-off | Split-up
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