The term "equity carve-out" refers to the situation where a firm's managers give themselves the right to purchase new stock at a price far below the going market price.Since this dilutes the value of the public stockholders, it "carves out" some of their value.

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The definition is incorrect. An equity carve-out refers to a company selling a portion of its subsidiary as an IPO, with the parent company retaining control. It does not involve managers purchasing new stock below market price.

The Term "Equity Carve-Out" Refers to the Situation Where a Firm's