• As a result of the spin-off, the parent company sells a portion of its shares in its subsidiary to the public through an initial public offering (IPO), effectively turning the subsidiary into a stand-alone company.

  • Since the shares are sold to the public, the spin-off also creates a new shareholder structure for the subsidiary.
  • The spin-off allows the company to benefit from a business segment that may not be part of its core business, as it still retains an interest in the subsidiary.
  • A spin-off is similar to a spin-off, however a spin-off occurs when the parent company transfers shares to existing shareholders rather than new ones.