Ways to Divest
The sale of non-core assets can provide companies with funds to invest in capabilities or opportunities that will enable sustainable growth and focus on their core business. Buyers and sellers will always have differing expectations on business value, what is non-core and divestable for one owner can be hugely attractive and valuable to another acquirer.
Trade Sale
In a trade sale the seller agrees to dispose of a part of the business, the subsidiary to another business or investor. A trade sale is generally and easier divestiture and generally tend to be a quicker and less complicated type of transaction.
Split-Off
As the name suggests, a split-off is similar to a spin-off because the process is to create a new legal business entity (not controlled by the parent company). The key difference lies in the fact that the shareholders may decide to take shares in the new entity.
Spin-Off
The company separates the part of the business to be sold (the subsidiary) and creates it into a stand alone unit - a completely new company and acquirers / investors are given shares in the new company. Spin-offs tend to generate value for shareholders, though they do not generate immediate cash and are typically part of an organisations larger strategic exit plan.
Liquidation of Asset
A liquidation of assets is often the last resort and entails the selling of a company in pieces for the value of the asset. It can be used as an exit strategy for particular business types.
Carve-Out
A carve-out occurs when the seller, or parent company, sells off a piece of the company that is not part of its main operation. This means shares are sold to a third party or could be sold via an IPO (initial public offering) and a new set of shareholders is established. While the parent company and subsidiary are two separate legal entities, unlike a spin-off, the parent company of a carve-out will usually still take an interest in supporting the subsidiary.