Legal Definitions - spin-off

Definition: A spin-off is when a company decides to sell or separate a part of its business and turn it into a new, independent company. The new company will have its own management, employees, and stock, which will be given to the original company's shareholders.

Example: In 2015, eBay spun off its payment processing company, PayPal, into a separate entity. eBay shareholders received one share of PayPal for every share of eBay they owned. PayPal then became its own publicly traded company.

Explanation: This example illustrates how a spin-off works. eBay decided to separate its payment processing business, PayPal, and turn it into a new company. eBay shareholders were given shares of PayPal, which allowed them to own a part of the new company. PayPal then became its own independent company, with its own management and employees.