How does a company spin off a subsidiary?
Technically, it is relatively simple for a holding company to divest itself of a subsidiary: the subsidiary s value is assessed by the holding with the help of financial analysts. This amount should correspond to the market value of the newly listed entity and be deduced from the parent entity s value after the spin-off. If a corporation with a market value of CHF 1bn spins off a subsidiary that has been valued at CHF 100m, the parent company should be valued at CHF 900m by the market and the former subsidiary at CHF 100m after the spin-off. This will only occur, however, if investors fully share the views of the analysts who calculated the subsidiary s theoretical value. If a company has decided to spin-off one of its divisions or business units, the divested entity must be restructured in such a way as to enable the creation of a legally independent company. Otherwise, the spin-off process is the same as described above. What is the aim of a spin-off? – To separate a subsidiary compl
