Spin Out

AAA

DEFINITION of 'Spin Out'

A type of corporate restructuring. Spin outs occur when a corporation breaks off parts or divisions of itself to form a new corporation. The new company that is spun out brings with it some of the parent company's assets and equipment. The SEC defines a spin out as when the parent company has a stake in the equity of the newly formed company.

INVESTOPEDIA EXPLAINS 'Spin Out'

Parent companies often provide support for their "children" by investing equity in them or becoming their first major customer. In many cases, the management team of the spin out firm is drawn from the parent company as well. Parent companies spin out new companies from themselves for many reasons, such as to market a new product under a different company name.

RELATED TERMS
  1. Takeover

    A corporate action where an acquiring company makes a bid for ...
  2. Tax-Free Spinoff

    A corporate action in which a publicly traded company spins off ...
  3. Breakup Value

    The sum-of-parts value of a publicly traded company. This value ...
  4. Merger

    The combining of two or more companies, generally by offering ...
  5. Parent Company

    A company that controls other companies by owning an influential ...
  6. Spinoff

    The creation of an independent company through the sale or distribution ...
RELATED FAQS
  1. No results found.
Related Articles
  1. Bonds & Fixed Income

    Cashing In On Corporate Restructuring

    Companies use M&As and spinoffs to boost profits - learn how you can do the same.
  2. Options & Futures

    Whom Should Corporations Please?

    Companies balance the interests of owners, customers and employees. Find out who comes out on top.
  3. Options & Futures

    Parents And Spinoffs: When To Buy And When To Sell

    Spinoffs can create great investing opportunities, but there's a time to stick around and a time to jump ship.
  4. Mutual Funds & ETFs

    Could Your Company Be A Target For Activist Investors?

    Find out why certain companies are targeted by these investors.
  5. Investing

    Use Breakup Value To Find Undervalued Companies

    Find out a company's worth if it were sold in pieces - it may be more than you think.
  6. Options & Futures

    The Basics Of Mergers And Acquisitions

    Learn what corporate restructuring is, why companies do it and why it sometimes doesn't work.
  7. Trading Strategies

    General Electric: Good News/Bad News

    General Electric is generous to its shareholders, but that's not the only factor to consider.
  8. Stock Analysis

    A United Technologies Product: Always Closeby

    If you flown in an airplane, shopped for food or sat comfortably in a hot climate, you've probably used a United Technologies product.
  9. Economics

    How A Limited Government Affects A Country's Finances

    Countries with limited governments have fewer laws about what individuals and businesses can and can’t do. What's the net result?
  10. Investing Basics

    How Does Goodwill Affect Financial Statements?

    Goodwill is a bit of a paradox--intangible, yet it is recorded as an asset on the purchasing company's balance sheet.

You May Also Like

Hot Definitions
  1. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  2. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  3. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  4. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  5. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
  6. Fringe Benefits

    A collection of various benefits provided by an employer, which are exempt from taxation as long as certain conditions are ...
Trading Center