Spin-off

Spin off is the operation of separating a subsidiary from the parent company by issuing shares. This model is relevant if there is an idea for a product with great development potential, but its promotion to the market requires a completely different structure and model of the company - more specialized and adaptive. To do this, a new one is created on the basis of the head structure. This new company has access to the resources of the parent company, which implies the receipt of investments, a client base, etc. By listing the subsidiary on the stock exchange, management expects that in total two companies will be worth more than one large one. Also, over time, a spin-off business can become more expensive than the parent company itself. This was the case, for example, in the case of eBay and its spin-off PayPal Holdings.
Another important aspect is taxes. During the spin-off, shareholders of the parent structure receive shares in the new company for free, and the state does not withhold anything from them. This is significantly cheaper than a classic IPO, and the effect for the shareholder is often comparable.