Which one of the following statements is correct?
A)A carve-out generates cash for the parent firm.
B)A split-up frequently follows a spin-off.
C)A carve-out is a specific type of acquisition.
D)A spin-off involves an initial public offering.
E)A divestiture means that the original firm ceases to exist.

Question

Quizplus · Accepted Answer

A carve-out involves the parent company selling or spinning off a portion of its business into a separate entity, which can generate cash for the parent firm. A split-up may or may not follow a spin-off, and a divestiture involves selling or spinning off all or a significant portion of a business, but the original firm may still exist. A spin-off does not necessarily involve an initial public offering, and a carve-out is not a specific type of acquisition.

Which One of the Following Statements Is Correct