When a company sells a portion or all of a division or subsidiary to the public in the form of an IPO, they are doing a spin-off. Parent companies do spin-offs for several reasons. First, to raise capital. The parent may be highly leveraged and need to pay down debt. Second, to rationalize its operations by selling off a non-core business. In this type of spin-off, the managers of the newly public company are (or should be) incentivized to perform well by stock in the new spin-off. Finally, a parent may decide to spin-off a division in an attempt to create shareholder value by drawing attention to a business segment that would command a higher valuation multiple as a standalone business than it does as a part of the parent.