Subsidiary spin-off

A subsidiary spin-off is when a parent company separates one of its divisions into an independent, publicly traded company. You'll see this announced in SEC filings and press releases when large corporations decide to split up. It matters because it can affect your investment—the new company's stock becomes tradeable separately, and the parent company's focus and value may change. For example, if TechCorp owned both software and hardware divisions, it might spin off the hardware business so investors can buy shares in each company independently. Shareholders in the original company typically receive shares in the new company automatically.