A parent wants to separate a division. How do a sale, a spin-off and a joint venture compare?
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A sale brings cash and a clean exit, which suits a parent that needs to cut debt, but involves transitional services and stranded costs. A spin-off distributes the division's shares to the parent's shareholders: it raises no cash but lets each business be valued separately, if the division can stand alone as a listed company. A joint venture pools assets with a partner and needs agreed governance, deadlock and exit terms.
What the interviewer listens for
Sale: cash and a clean exit
Spin-off: no cash, separate valuation
Joint venture: governance, deadlock and exit terms
Mergers and Acquisitions · INT.BM.3.a: Compare share and asset purchases, carve-outs, spin-offs and joint ventures, and adjust a carve-out's EBITDA for standalone and stranded costs.
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