Divestitures: Creating Value Through Strategy, Structure, and Implementation

CHAPTER 7

Appropriating Value from Spinoffs: Equity Carveouts and Reverse Morris Trusts

INTRODUCTION

While the exchange of assets is as old as humanity (an early ironmonger might well have swapped a newly forged hammer for a pair of sandals), and while the sale of assets is as old as civilization (his descendants might have sold it for Sterling), spinoffs are only as old as the modern corporation, a few centuries. The divestiture structures discussed in this chapter, however, are young; there are probably people alive today who can recall their first implementation. This chapter reviews two of them—equity carveouts and Reverse Morris Trusts—as well as a series of techniques that companies can employ to appropriate value from spinoffs, while ...