A spinoff, also known as a spinout or starburst, creates a new company out of an existing company. It's a type of divestiture, and is only done if a parent company expects that the new company will be worth more on its own and the parent company can offer added value without it.

A spin-off distributes shares of the new subsidiary to existing shareholders. A split-off offers shares in the new subsidiary to shareholders but they have to choose between the subsidiary and the parent company. A carve-out is when a parent company sells shares in the new subsidiary through an initial public offering (IPO).

A Spin-Off refers to when a parent company sells a specific business unit or division, i.e. a subsidiary, to effectively create a new standalone company. As part of the spin-off, the parent company’s existing shareholders are given shares in the new independent company.

A spinoff transaction occurs when a company divests itself of a subsidiary. It is a type of de-merger. In this transaction, the company distributes shares of the subsidiary to the company’s existing shareholders. There are several reasons a company might separate its businesses.