Definition of spin-off

The creation of a separate company from part of an existing firm. There could be several reasons for such a move - for example a strategy to dispose of non-core assets, or an attempt to unlock a division's value by giving it a more independent management structure and possibly attracting outside investment.

Shareholders of the parent company would normally receive a proportionate number of shares in the new entity. If the parent company decides to sell only a minority stake in the business, the exercise is called a partial spin-off. [1]

A spin-off is also a company whose business is based on products or technology initially developed in a parent company, university or research institution.

Example
Plant Genetic System (PGS) was founded in 1983 by two professors at Ghent University (Belgium). Marc Van Montagu and Jeff Schell were among the first to assemble a practical system for genetic engineering of plants. That technology, which was developed within the university, served as the basis for the success of PGS.  In 1985, PGS was the first company to develop genetically engineered tobacco plants with insect tolerance. [2]

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