Corporate “Spin-Off” VERSUS “Split-Off” VERSUS “Carve-Out”

Posted on February 4, 2022 by Dr. David Edward Marcinko MBA MEd CMP™

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By Staff Reporters

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In a spin-off, a company would distribute a number of shares to its investors. Each investor would receive shares of the new company for every share they owned.

In a split-off, investors would be allowed to directly trade none, all, or part of their owned shares. The exchange would likely retire outstanding shares for remaining investors. But investors must be convinced to voluntarily make that trade, so “sweeteners” are often included.

An equity carve-out, also known as a split-off IPO or a partial spin-off, is a type of corporate reorganization, in which a company creates a new subsidiary and subsequently IPOs it, while retaining management control

MORE: https://www.investopedia.com/articles/investing/090715/comparing-spinoffs-splitoffs-and-carveouts.asp

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40 Years – MICROSOFT Corp.

Posted on June 27, 2021 by Dr. David Edward Marcinko MBA MEd CMP™

Microsoft's biggest moments throughout the years in a chart

Click to access foreword-dyken-md-mba.pdf

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ASK A FINANCIAL ADVISOR? About Company “Vesting”

Posted on June 12, 2021 by Dr. David Edward Marcinko MBA MEd CMP™

A YOUNG PHYSICIAN INQUIRES ABOUT NON-PUBLIC COMPANY SHARES AND VESTING?

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QUESTION: I am a physician and work for a startup healthcare IT company with shares in a non-public company that vests over time. What does that mean, and will the shares only be worth something if we go public or are acquired?

–Shelly from Boston, MA

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ANSWER: In most cases, startups dangle equity compensation over employees like a just-out-of-reach cupcake in front of a treadmill. Vesting means some condition needs to be met before you fully own your shares, whether it’s staying at the company for a period of time, reaching a target valuation, or both.

Once your shares have fully vested, you’d think you can finally cash in. But that’s not always the case. It’s a hassle to sell private company shares because there are far fewer buyers compared to selling shares in a publicly traded company. 

If you want to sell your stake before the company goes public, you can ask the execs at your company to buy back your shares. If they say no—and they might, because once they let one employee sell, it’s hard to turn down others—you need another buyer, like an outside investor.

There are eBay-like marketplaces for selling private company shares, but it’s not like posting a picture of your old iPod and offering free shipping. You can only sell to accredited investors (aka hedge funds and other rich folks), and your company needs to authorize the sale. 

It’s way easier to sell your shares if and when your company goes public or is acquired by another company.

Thanks for the query.

Citation: https://www.r2library.com/Resource/Title/0826102549

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