In carve-out transactions:
A)shares of the new company are given to the shareholders of the parent company.
B)shares of the new company are sold in a public offering.
C)shares of the new company are bought by borrowing or issuing junk bonds.
D)None of these options are correct.

Question

Quizplus · Accepted Answer

In carve-out transactions, shares of the new company are typically sold in a public offering to outside investors. This allows the new company to raise capital independently from the parent company and gives it the ability to operate and make strategic decisions on its own. Option A is incorrect because the shares are typically not given to the shareholders of the parent company. Option C is possible but not the typical approach, and option D is not correct as there is a specific process involved in carve-out transactions.

In Carve-Out Transactions