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What's a Spin-Off company

John Jai
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Joined: May 31, 2011
Posts: 1776
I see in a company webpage it's mentioned that it is a Spin-Off company. Wiki tells a company formed by some corporate transaction. Could you please explain a bit on what you understand?
Matthew Brown
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Joined: Apr 06, 2010
Posts: 4344
    
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They're often (and it looks like that in this case) start-up companies based on academic research. The University and/or individual researchers set up the company (often with external investment, but probably retaining some of the ownership) to exploit that research in some way (selling a product, providing services, etc).

I suppose the term would be more generally applied to any separate company set up by another body for a specific purpose.
Paul Clapham
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Joined: Oct 14, 2005
Posts: 18541
    
    8

Matthew Brown wrote:I suppose the term would be more generally applied to any separate company set up by another body for a specific purpose.


Yes, that's a pretty good description. Sometimes the separate company is "spun off" because it is really in a different line of business than its parent company, and the parent company wants to "stick to its core competency". Sometimes no doubt it's done for tax reasons or so that the parent company isn't affected by government regulation which applies to the spun-off company; there could really be any number of reasons (not necessarily good ones, either) to do a spin-off.
 
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