Academic journal article Journal of Case Studies

Sears' Spinoff of Lands' End

Academic journal article Journal of Case Studies

Sears' Spinoff of Lands' End

Article excerpt

Learning Outcomes

After completing this case, students should be able to:

1. Describe the justifications for a firm to spin off a business division.

2. Identify how the transfer of value of the newly created firm from the parent firm in a spinoff is accounted for on the balance sheets of both firms.

3. Explain how a spinoff may affect the required rate of return on debt for the parent firm and the new firm created by the spinoff.

4. Evaluate how the terms of a spinoff might affect the ability of the newly created firm to operate following a spinoff.

5. Determine if value was added by a parent to a business division prior to a spinoff.

Application

This descriptive case study is most appropriate for intermediate undergraduate and MBA finance courses. …

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