Spin-off

A spin-off is a transaction in which a parent company creates a new independent entity by separating a division or subsidiary, with current shareholders receiving shares in the new entity proportional to their existing ownership. It differs from a sale (which transfers value to a third party) in that existing shareholders retain their economic exposure to the spun-off activity. In valuation, spin-offs can unlock value by eliminating the holding discount or enabling clearer market pricing of each business through a sum-of-the-parts (SOTP) analysis.

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Example: a listed Swiss industrial group spins off its fintech division to allow the market to value the profitable industrial core (20x EBITDA) and the high-growth fintech (6x ARR) separately. Post-spin-off, the combined market capitalisation of both entities exceeds the prior consolidated valuation by 30% — demonstrating the value unlock achieved by eliminating the conglomerate discount and enabling dedicated sector investors to hold each entity.

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Hectelion values spin-off divisions and advises on separation structuring to maximise shareholder value creation.