Listed carve-outs continue to perform strongly, delivering value for shareholders

Listed carve-outs continue to perform strongly

Carve-out transactions via the capital markets continue to deliver significant value for shareholders, with listed carve-out entities typically outperforming their respective indices, according to new analysis by professional services firm KPMG.


In its new ‘Dissecting Public Carve-Outs’ report, KPMG analysed the financial and performance outcomes of 45 public capital market carve-outs that have taken place in jurisdictions including the US, Europe, UK and Australia over the past five years.

Specifically, the firm analysed the carved-out businesses’ share price movements by comparing the opening share price as of the listing date with the post-transaction share price after one, two, and three years, respectively. The firm then looked at whether post-transaction share price performance varied depending on whether companies were divested via a spin-off (where shares in the carve-out entity are distributed to the current shareholders of the parent on a pro-rata basis as a ‘dividend in kind’), an IPO, or a hybrid transaction.

The analysis found that overall, carve-out companies perform favourably, especially over a three-year period.  The data also indicates that carve-out businesses see greater share price performance when the ultimate parent ceases control (with mean share prices increasing by 26% after one year; 29% after two years; and 53% over three years), suggesting that to build shareholder value, carve-out businesses need to be able to operate truly independently.

Richard Sharman, Head of Sell-Side for KPMG’s Deal Advisory practice, commented:

“As markets begin to recover, many businesses are considering new active portfolio management strategies for structuring their operations and reshaping their portfolios. There is renewed focus on efforts to reinforce balance sheets against future market disruptions and economic anomalies, reduce costs, optimise operational efficiency, and direct the business towards achieving sustainable long-term growth.”

“With economic trends and regulatory changes evolving rapidly, and product lifecycles increasingly shortened, leaders are aiming for agility in their portfolios. In addition, the ESG agenda is increasingly causing businesses to reconsider their portfolios by focusing more strongly on sustainability.

“Against this backdrop, a carve-out – in which a company either floats part of the business on the public market or divests it in a sale – is an increasingly attractive option for companies that want to restructure, refocus on core competencies, or adjust to major regulatory policy changes in certain sectors of the economy.”

The most frequent transactions in KPMG’s study took place in financial services; however, carve-outs are not limited to certain sectors. Indeed, their prevalence across all industries points to their importance as sectors become more intertwined, regulatory efforts adjust or increase, and market disruptions and product lifecycles become more fast-paced and dynamic. Such factors are prompting an increase of strategic portfolio restructuring for companies across industries.

Richard Sharman added: “For the parent company, any disposal of non-core assets, whether via public listings or indeed a sale, can help maintain liquidity, increase shareholder value and unlock vital funds to reshape the business to enable sustainable growth. But unlocking the full value of non-core assets is not straightforward as they are often deeply integrated into the business.

“As with any other divestment, conveying a successful equity story as part of communications to the capital markets is therefore vitally important.”

Other key findings of the report:

  • Public carve-out processes take time and require thorough advance planning: A time span of one year between first announcing the transaction and listing the carve-out business on a stock exchange is an appropriate rule of thumb.
  • Carve-outs need a PMO to manage multiple workstreams: These transactions’ inherent complexities and interdependencies require a comprehensive project management office that steers, monitors, and manages the process.
  • Regulatory requirements are quite complex: Combined and/or carve-out financial statements must often be prepared because standard historical financial information may not appropriately reflect the economic activities of the carve-out business.
  • Transitional Service Agreements (TSAs) play a crucial role in the carve-out process: TSAs usually cover multiple areas, especially administrative functions. Carefully defining all relevant terms is critical to avoid future conflicts and share-price impacts.



This study provides an in-depth analysis of 45 public capital market carve-outs that took place in major markets include the US, Europe, UK, India, Japan and Australia from 2015 to March 2020. We identified ‘significant’ transactions based on their revenues or relevance within a jurisdiction or business sector. The focus was on public carve-outs rather than private divestments or trade sales.


For further information, please contact:

Katy Broomhead, Senior PR Manager

Tel: 0161 246 4623 / 07824 537963


KPMG Press Office: 020 7694 8773

About KPMG

KPMG LLP, a UK limited liability partnership, operates from 21 offices across the UK with approximately 17,600 partners and staff.  The UK firm recorded a revenue of £2.40 billion in the year ended 30 September 2019. KPMG is a global network of professional firms providing Audit, Tax, Legal and Advisory services. It operates in 154 countries and has 200,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.  Each KPMG firm is a legally distinct and separate entity and describes itself as such.

© 2022 KPMG LLP a UK limited liability partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

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