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Identify one similarity and one difference between a spin-off and liquidation.

Identify one similarity and one difference between a spin-off and liquidation.

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There are both the forms of a divestiture. Whenever a organisation finds the need to dis invest its funds from one type of business or department or arm (for one reason or the other) it can resort either to spin off (for profitable arm) OR liquidation (loss making unit)

Difference :

By Spin off a new company is brought to being. In Spin off a department is carved and made into new company by issuing new share to the existing shareholders. Eg: Agilent Tech was spin off from Hewlett Packard in 1999.

Whereas in Liquidation a company is struck off from the books or as it is said brought to a corporate death. Eg Lehmann Brothers.

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