Equity carve-out
Encyclopedia
Equity carve-out is a sort of corporate reorganization, in which a company creates a new subsidiary
and IPOs it later, while retaining control
. Usually, up to 20% of subsidiary shares is offered to the public. The transaction creates two separate legal entities—parent company and daughter company—with their own boards, management teams, financials, and CEOs. Equity carve-outs increase the access to capital markets, enabling carved-out subsidiary strong growth opportunities, while avoiding the negative signaling associated with a seasoned offering
(SEO) of the parent equity.
Subsidiary
A subsidiary company, subsidiary, or daughter company is a company that is completely or partly owned and wholly controlled by another company that owns more than half of the subsidiary's stock. The subsidiary can be a company, corporation, or limited liability company. In some cases it is a...
and IPOs it later, while retaining control
Control (management)
Controlling is one of the managerial functions like planning, organizing, staffing and directing. It is an important function because it helps to check the errors and to take the corrective action so that deviation from standards are minimized and stated goals of the organization are achieved in...
. Usually, up to 20% of subsidiary shares is offered to the public. The transaction creates two separate legal entities—parent company and daughter company—with their own boards, management teams, financials, and CEOs. Equity carve-outs increase the access to capital markets, enabling carved-out subsidiary strong growth opportunities, while avoiding the negative signaling associated with a seasoned offering
Seasoned equity offering
A Seasoned equity offering or secondary equity offering is a new equity issue by an already publicly-traded company. Secondary offerings may involve shares sold by existing shareholders , new shares or both....
(SEO) of the parent equity.