Carve-out

A carve-out is the separation of a business division, a subsidiary or a product portfolio out of a larger company, with the aim of an independent sale or standalone positioning. Typical drivers are strategic focus, regulatory requirements or the realisation of hidden value.

Carve-outs are complex operationally and in transaction terms: separating IT, personnel, contracts, finances and brands requires a robust standalone business model. Transitional service agreements (TSAs) are important in this context, as is — frequently — a separately prepared carve-out balance sheet and P&L. In the tech environment, spin-outs from corporate structures are a classic use case.