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Spin Off
A spin off is a transaction in which a subsidiary or a division of a corporation becomes a separate legal entity. A spin off often occurs after a corporation transfers some of its assets to a newly formed corporation. For example, a division of a corporation may be spun off. It can then begin the process of going public through an Initial Public Offering [an IPO] and become an entirely new corporation. In exchange for the assets transferred into the new corporation, the original corporation's stockholders receives all of the capital stock of the newly formed corporation. However, this new corporation is separate and distinct from its former parent company.
© 2009 by Michael C. Dennis. All Rights Reserved. Michael is the author of "Credit and Collection Handbook."