DealLawyers.com Blog

A recent Paul Hastings memo discusses spin-offs as a potential alternative for biotech companies to unlock value. While the memo focuses on that industry, much of its discussion of the key legal and business considerations associated with a spin-off applies to companies in any industry considering such a transaction.  This excerpt addresses some of the issues that need to be addressed when considering how to separate the businesses and employees involved in the transaction:

Planning for a spin-off involves identifying assets and liabilities to be separated, allocation of employees, identifying and addressing shared assets and contracts, consents, waivers, notices and possibly transition services agreements.

If the businesses to be separated are tightly integrated or are expected to have significant business relationships following the spin-off, it could take more time and effort to allocate assets and liabilities, identify personnel that will be transferred, separate employee benefits plans, obtain consents relating to contracts and other rights, and document ongoing arrangements for shared services (e.g., legal, finance, human resources and information technology) and continuing supply, intellectual property sharing and other commercial or operating agreements.

Other topics addressed include tax matters, intellectual property and licensing, legal and contractual considerations and public company considerations.

– John Jenkins