Research On The Impact Of Equity Carve-outs On Value Creation Based On TOC Theory

In 2019,the official opening of the Science and Technology Innovation Board and the implementation of the Equity Carve-outs policy make the overseas medical industry set off a boom of spin-off subsidiaries returning to A-share listing.In July2019,the Micro Port Scientific Corporation split Endovastec on the science and technology innovation board by holding a spin-off.This paper selects the listing case of the Micro Port Scientific Corporation spin-off Endovastec as the research object,takes TOC theory(Theory of constraints)as the analysis idea of the case study,starts from the problems existing in the group before spin-off,and conducts a systematic and in-depth study on whether Equity Carve-outs can improve the efficiency of "financing,investment and operation" of the enterprise and thus promote value creation.On the basis of introducing the listing background,the purpose,the process and the specific implementation plan of the spin-off,this paper demonstrates to be studied from multiple and analyzes the problems perspectives.Starting from defining the financing level of UDEs(Undesirable Effects),the paper analyzes the impact of the break-up on the financing efficiency from two aspects: the financing status and market value of enterprises before and after the break-up.Starting from the definition of the investment level-UDEs-the paper analyzes the impact of the break-up on the investment efficiency in terms of group investment effect and subsidiary investment demand before and after the break-up.Starting from the definition of business operations(UDEs),this paper analyzes the impact of divestment on business efficiency from two aspects: operation management and business benefits before and after divestment.Finally,the value creation effect of Equity Carve-outs is further verified from the three dimensions of market,financial and non-financial effects.The research found that:(1)the enterprise value of the Micro Port Scientific Corporation is undervalued and financing risks are high financing constraints,while the group’s financing constraints are eased after the completion of the Equity Carve-outs,and the parent and subsidiary companies obtain higher market valuation.(2)Before the spin-off,the effect of the group’s extension merger and acquisition is not obvious and the investment demand of subsidiaries is limited,so the resource allocation efficiency of the spin-off listed group can be effectively improved.(3)Before the spin-off,the group had weak operation and management ability,low operation efficiency and poor profits.However,due to the influence of epidemic disease and intensive mining and other factors,the operating efficiency of the parent company was not effectively improved after the spin-off,while the Endovastec achieved a higher operating performance.(4)Equity Carve-outs has a significant impact on value creation.The parent and subsidiary companies have obtained positive financial and non-financial effects and effectively improved their market value.The main innovations in this paper are:(1)Introducing new thinking.Guided by TOC theory,case studies are carried out from the problems existing in the group.(2)Analyzing multiple perspectives.This paper demonstrates the impact of Equity Carve-outs on value creation from financing,investment and operation.(3)Combining new methods.Factor analysis method is used to construct the financial effect evaluation index system to test the value creation effect of Equity Carve-outs.