Log in to access ShareFile

Forgot your password? powered by Citrix ShareFile
ACap Asset Management
Protecting Your Financial Health
As Seen In
  • The Wall Street Journal
  • Kiplinger
  • FIdelity
  • AdviceIQ
  • USA Today
  • The Washington Post
  • Nasdaq
  • Reuters
  • Investment News
  • Business Insider
  • The Huffington Post
  • Money
  • Yahoo Finance
  • Christian Science Mentor
  • credit.com
  • Physicians Practice
  • NerdWallet
  • El Nuevo Herald
Fee-Only Financial Planning and Investment Services
For health care professionals, business owners, and individuals
Get a pulse on your financial position

What is the difference between Spin-Off, Split-Off, and Split-Up?

This question arose recently with a client who owns shares of General Electric (GE). GE recently declared a corporate action to split-off its ownership of Synchrony Financial (SYF) into a standalone company.  Most people are familiar with a spin-off, when a company divests a division/company and issues new shares of an existing company they own. A familiar example is when Pepsico spun off Yum brands (Kentucky Fried Chicken, Pizza Hut, and Taco Bell) in 1997. In a spin-off, the existing shareholders do not relinquish shares, but receive new shares of the spin-off company – so Pepsico shareholders received new shares of Yum brands. In a split-off, the parent company (GE) offers its shareholders the opportunity to exchange some of their GE shares for shares of an existing company (SYF). Spin-Offs and Split-Ups are very similar, but their taxation to the shareholder is different. The final type of corporate action is a Split-Up whereby an existing company is split into two or more companies. In the end, the parent company does not exist. A very well-known split-up happened when the U.S. government forced the split-up of the Bell System in 1982. The result was the creation of the Baby Bells which were seven separate telecommunication companies.

Stay tuned for a more indepth article on the major differences among each type of corporate action, including the tax implications.

Have a financial question about spin-offs, split-offs, and split-ups? Contact ACap Asset Management at info@acapam.com or 818-272-8511 and we can help you out.

Ara Oghoorian, CFA, CFP® is the president and founder of ACap Asset Management, Inc., a “Fee-Only” investment management firm located in Los Angeles, CA specializing in helping doctors and physicians make sound financial decisions.