Asked by Ginger Parker on Jun 01, 2024
Verified
Which of the following is the best definition of an equity carve-out?
A) The sale of stock in a wholly owned subsidiary via an IPO.
B) A targeted share repurchase method.
C) The sale of assets, operations, divisions, and/or segments of a business to a third party.
D) Investment in more than one asset; returns do not move proportionally in the same direction at the same time, thus reducing risk.
E) Rules and practices relating to how corporations are governed by management, directors, and shareholders.
Equity Carve-Out
A strategy where a company sells a percentage of an operating unit's stock to outside investors.
IPO
Initial Public Offering, the process by which a private company becomes publicly traded on a stock exchange by offering its shares for sale to the public for the first time.
Subsidiary
A business that is either fully or partially owned and controlled by another entity, referred to as the parent company.
- Gain familiarity with the different kinds of mergers and acquisitions.
Verified Answer
KJ
Keisha JohnsonJun 05, 2024
Final Answer :
A
Explanation :
An equity carve-out occurs when a company sells stock in a wholly owned subsidiary through an initial public offering (IPO). This allows the parent company to capitalize on the subsidiary by selling shares to the public while still maintaining a controlling interest in the subsidiary.
Learning Objectives
- Gain familiarity with the different kinds of mergers and acquisitions.