An equity carve-out differs from a spin-off for all but which one of the following reasons?
A) Generates a cash infusion into the parent
B) Is undertaken when the unit has very little synergy with the parent
C) The proceeds often are taxable to the parent
D) Continues to be influenced by the parent's management and board
E) The carve-out's shareholders may differ from those of the parent's shareholders

Question

Quizplus · Accepted Answer

An equity carve-out is undertaken when the unit has little synergy with the parent, which is similar to a spin-off. However, an equity carve-out generates a cash infusion into the parent, which is not true for a spin-off. Both types of transactions can have taxable proceeds, and both can continue to be influenced by the parent's management and board. Additionally, the shareholders of the carve-out may differ from those of the parent, but this is not a distinguishing factor between a carve-out and a spin-off.

An Equity Carve-Out Differs from a Spin-Off for All but Which