# Spin-Off

*Corporate Finance & M&A — Finicade finance glossary*

A spin-off distributes shares in a subsidiary directly to existing shareholders, creating an independent listed company with no cash changing hands. It's usually tax-free, which is its advantage over a sale. Spun-off companies have historically outperformed, attributed to focused management and to forced selling by index funds that can't hold the smaller entity, creating a short-term discount.

**Also known as:** demerger, spinoff, split-off

**Related terms:** [Carve-Out](https://finicade.com/glossary/carve-out), [Divestiture](https://finicade.com/glossary/divestiture), [Sum-of-the-Parts Valuation](https://finicade.com/glossary/sum-of-the-parts-valuation), [Activist Investor](https://finicade.com/glossary/activist-investor), [Corporate Governance](https://finicade.com/glossary/corporate-governance)

Source: https://finicade.com/glossary/spin-off