A corporate spinoff is the creation of an independent company through the sale or distribution of new shares of an existing business or division of a parent company.
There are a handful of reasons that a company may consider a corporate spin off. Businesses wishing to streamline their operations often sell less productive or unrelated subsidiary businesses as spinoffs. For example, a company might spin off one of its mature business units that is experiencing little or no growth so it can focus on a product or service with higher growth prospects. Generally speaking, the spun-off companies are expected to be worth more as independent entities than as parts of a larger business. Spinoffs are not uncommon, with about 50 per year in the United States. Corporate clients consider spinoffs as they tend to increase returns for shareholders by allowing the newly independent companies to better focus on their specific products or services.
As with any time your clients are contemplating a corporate change-up, spin-offs are a great opportunity to remind them of their compliance requirements (and for you to consider our streamlined system as an automated option for your clients needs).
Multiple Stages in the Spin-Off Process
There are a number of different stages involved in a spin-off process and where you, and a cloud based software program, can provide automated service your clients. The stages of the spin-off include:
- Planning or strategizing how that spin off will take place
- Post-execution or wrap-up stage when the spin off is complete
Legalinc allows its clients, including legal service professional, to offer a range of services as their own, including business formations, transactional filings, registered agent services, document management, and customizable compliance services.
Internal and External Compliance Challenges
There are numerous internal and external compliance obstacles that may pop up during a corporate spin off, particularly relating to Secretary of State requirements, federal and regulatory filings, and obtaining board approval. Our technology-driven software platform automates many of these time-consuming administrative and compliance tasks, allowing you to focus on conversations with your board, and other pressing matters.
For many spin-offs, deadlines must be monitored and met. In-house and corporate counsel often spend countless hours creating detailed master calendars as missed deadlines might put the client / corporation at risk by having it fall out of compliance. The Legalinc software platform automates much of this, liberating clients who would otherwise be spending precious time on administrative and compliance tasks that software can do more effectively and in much less time.
For more information on how our technology platforms can assist your professional needs, contact Legalinc today.