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.

Question

Quizplus · Accepted Answer

In carve-out transactions, shares of the new company are typically sold in a public offering. This allows for the new company to become a standalone entity with its own shareholders, separate from the parent company. Option A is incorrect as the shares are not simply given, but sold or distributed. Option C may occur, but it is not the typical method for selling shares in a carve-out transaction. Option D is incorrect as there is a specific process of spinning off a subsidiary or business unit into a new company that constitutes a carve-out transaction.

In Carve-Out Transactions