When companies decide to sell companies or business units, this is known as a carve-out. The reasons for this can be many and varied. Carve-outs, also known as partial divestiture or de consolidation, involve the strategic separation of a business unit or assets, providing companies with a means to optimize focus and value within their operations. The carve-out process allows the subsidiary or separate entity to function independently; however, the parent company retains a degree of control and discretion. In addition to organizational and contractual challenges, this also poses a special challenge for IT.
Key features of a carve-out :
- A carved out entity that is separate from the parent company gets a free will to sell a few of its stake in the public domain through the medium of IPO.
- The subsidiary unit has a management and operations of its own, with separate legal experts, entities and analysts.
- The parent company does hold the majority of its stake in the segregated or subsidiary unit.
Types of Carve-Outs
Carve-outs are strategic initiatives that involve separating a specific business unit, division, or set of assets from a parent company to create a separate entity. This restructuring approach allows companies to focus on core operations, unlock value, and pursue new opportunities. There are various types of carve outs, each serving distinct objectives. Let’s explore some common types of carve-outs:
1) Spin-Offs
Author: Aven Data
AvenDATA specializes in system decommissioning and IT carveouts due to company acquisitions, sales and mergers to uncover legacy systems.
