The term "equity carve-out" refers to the situation where a firm's managers give themselves the right to purchase new stock at a price far below the going market price. Since this dilutes the value of the public stockholders, it "carves out" some of their value.

Select one:

a. True

b. False

b. False

Explanation:

Equity carve - out is an investment strategy executed by corporations. It involves a company selling minority shares through an Initial Public Offerring (IPO) to the external investors with an objective of partially divesting their subsidiaries or business units. This way, the management would retain majority stake and control over the parent company and sell limited shares of its division to the public.