What is a Carve-Out? – Definition from Divestopedia

What Does Carve-Out Mean?

A carve-out refers to a business unit or units that are spun off, or “carved out,” out of a larger company or companies. Usually these business units have existing management and customers in place, but there is a catalyst that encourages the larger company to divest. This catalyst may be that the business unit provides a service or product that is not core to the overall strategy, the overall company may have too much debt and is looking to monetize a valuable piece of the business for debt reduction, or simply the unit has considerable value that is not being reflected in the overall valuation of the company.