We've seen some examples of divestitures, but how can you divest? What options do you have available if you want to divest? The firms in our examples do it quite differently. Toshiba sold the medical business to Canon. This is called a sell-off. It's the opposite of an M&A. We say that Canon acquired the business and that Toshiba sold-off the business. Next, eBay also exited the business, but it did not sell PayPal to another company. Instead, two independent companies were created. This is called a spin-off. In practical terms, if you had one share in the combined company, then after the transaction you would have one share in eBay, and in addition, you will get a new share in PayPal. You could then decide whether to keep both shares, keep only one share or sell both. As in the previous example, the shares of the medical business went to another company, Canon. In this example, the shares went to the existing owners or at least initially. Finally, Phillips is taking a gradual process to exiting a business. It initially sold 25% of the lightning business to the general public by creating publicly traded shares in the lighting business. This is called an equity carve-out. As is typical in an equity carve-out, over time, Phillips is selling most of its shares in lighting. Its stated objective is to fully sell down all its shares over the years to come. Here's an overview of the different ways to divest. Let's say you're running a firm active in three businesses, here shown on your left. You're considering divesting from the third business. In a sell-off, another company would buy your business. Here, another company is the new owner of your business. In a spin-off, the business would become independent with its shares going to the original shareholders. In an equity carve-out, the business initially remains part of the firm with outside investors becoming part owner. Typically, over time, the original firm would sell all its shares in that business. In a split-up, shares are created in the underlying business with those in the former parent discontinued. Thus, a split-up is like a spin-off, with the difference that the former parent no longer exists. If you want to divest, we now know which options you have available. We're going to focus on sell-offs and spin-offs. We're not going to focus on equity carve-outs and split-ups. The reason is that equity carve-outs often end up like spin-offs and sell-offs. Split-ups, on the other hand, they are implemented through equity carve-outs and spin-offs. So if we have a good understanding of spin-offs and sell-offs, we know quite well the main modes of divestiture. In the next video, we're going to look at when we should divest.