Disambiguate corporate separation paths for operators and PE-facing founders.
Carve-Out vs Spin-Off vs Split-Off
Cash, control, and tax differ — PE buyers care about separation risk most.
| Dimension | Equity carve-out | Spin-off | PE carve-out buy |
|---|---|---|---|
| Cash to parent | Yes — IPO proceeds; sells stake publicly | Usually no cash — shares to parent holders | Yes — sponsor pays cash for the asset |
| Control after | Often retained — parent may keep majority | Fully separated independent company | Sponsor control — buyer owns the asset |
| Hardest diligence item | Public readiness — reporting, governance | Tax-free status — §355 / business purpose | Standalone costs — TSAs, stranded cost, carve financials |
Audience: operator, investor · Category: terms
Tags: carve-out, spin-off, ma, private-equity