Spin-off and split-off are components of divestiture, which involves dividing a company or selling part of it to another company leading to the creation of a separate branch.
<span class=\"
Conclusion
Companies need to conduct spin-offs or split-offs in case of low productivity in the company. The division to two companies offers an opportunity to concentrate on critical areas.
Companies prefer spin-off strategy because the shareholders retain their shares in both the parent company and the new division. Through the ownership of shares in both companies, the shareholders are covered in case one company collapses or fails to produce.
Split-off offers the shareholders a greater chance of growing in case the new company picks up. The revenue is shared among a few members since they are independent of the parent company.
References
- https://scholarship.law.duke.edu/cgi/viewcontent.cgi?article=2072&context=dlj
- https://papers.ssrn.com/sol3/papers.cfm?abstract_id=241226