skills/event-driven-analyzer/references/spins_activism_playbook.md

# Spin-Off, Split-Off, and Activism Playbook

Use this reference for spin-offs, split-offs, RemainCo/SpinCo trades, activist campaigns, proxy fights, board contests, capital-return campaigns, and strategic-alternative pushes.

## Spin-off and split-off objective

Answer: Are SpinCo and RemainCo mispriced because of separation, capital structure, incentives, investor-base rotation, tax constraints, or forced selling?

## Spin required fact pack

- Parent, SpinCo, RemainCo, tickers if available.
- Transaction type: spin, split-off, carve-out, IPO, retained stake, Reverse Morris Trust.
- Record date, distribution date, when-issued trading date.
- Distribution ratio.
- Tax treatment and tax constraints.
- Form 10 / information statement status.
- Pro forma financials by entity.
- Debt allocation and cash transfer.
- Stranded costs, dis-synergies, transition service agreements.
- Management teams and incentives.
- Board composition.
- Retained stake and monetization plan.
- Index eligibility and likely forced selling.
- Liquidity, expected float, short interest/borrow if available.

## Spin analysis workflow

1. Separate the businesses.
2. Normalize segment financials and pro forma costs.
3. Allocate debt, cash, pensions, environmental, litigation, and tax liabilities.
4. Select peer sets for SpinCo and RemainCo.
5. Build SOTP value range.
6. Analyze technical flows: holder base, index eligibility, size, liquidity, mandate fit.
7. Assess management incentives and capital allocation.
8. Decide entry point: pre-spin, when-issued, post-distribution, or wait.
9. Recommend trade: long parent, long SpinCo, long RemainCo, pair trade, avoid.
10. Build monitoring plan.

## Spin senior judgment questions

- Does the current shareholder base want the spun asset?
- Is SpinCo too small, levered, cyclical, low-margin, or off-index for forced holders?
- Are stranded costs understated?
- Is the balance sheet fair, or did the parent over-lever SpinCo?
- Does management have real incentive alignment?
- Is the story a real pure-play re-rating or just conglomerate complexity moved elsewhere?
- Is the better trade before the spin, in when-issued trading, or after forced selling?
- Are tax constraints limiting strategic alternatives?

## Spin output requirements

- PM recommendation and timing.
- Spin mechanics and timeline.
- SpinCo valuation range.
- RemainCo valuation range.
- Pro forma capitalization.
- Forced-selling and index-flow assessment.
- Management incentive assessment.
- Trade expression and monitoring plan.

## Activism objective

Answer: Can the activist force value creation, board change, sale, breakup, buyback, margin improvement, governance reform, or settlement, and what outcome is priced in?

## Activism required fact pack

- Company, ticker, market cap, sector.
- Activist identity, track record, style, and prior campaigns.
- Ownership percentage, cost basis if known, derivatives/swaps, filing history.
- Campaign demands.
- Board composition, tenure, independence, committee structure.
- Governance: staggered board, poison pill, bylaws, advance notice, nomination window, universal proxy setup.
- Shareholder base, passive ownership, insider ownership.
- Company response.
- Annual meeting date, record date, nomination deadline.
- ISS/Glass Lewis timing and likely stance if available.
- Prior underperformance and operational issues.
- Value creation levers: sale, breakup, margin, capital allocation, management change, governance.

## Activism analysis workflow

1. Identify campaign type: sale process, board refresh, margin plan, capital return, breakup/spin, management change, governance, or strategic review.
2. Assess activist credibility and track record.
3. Build value-creation bridge: what could change numbers or multiple?
4. Analyze shareholder base and vote math.
5. Assess board vulnerability and defense posture.
6. Estimate settlement probability vs proxy contest probability.
7. Build scenarios: no change, settlement, partial win, full win, sale, downside.
8. Recommend trade expression and sizing.
9. Build catalyst timeline.

## Activism senior judgment questions

- Is the activist's plan economically credible or just financial engineering?
- Is the board vulnerable because of underperformance, governance, capital allocation, or strategy?
- Will long-only and passive holders support change?
- Is management credible enough to preempt the campaign?
- Is a settlement more likely than a full proxy fight?
- What is the downside if the activist loses?
- Does the stock already discount a sale or board change?

## Activism output requirements

- Campaign summary.
- Activist credibility.
- Value-creation plan assessment.
- Vote math and board vulnerability.
- Settlement/proxy fight probabilities.
- Expected value by scenario.
- Trade recommendation.
- Next dates and monitoring plan.

## Common mistakes to avoid

- Treating all spin-offs as automatically value creating.
- Ignoring pro forma stranded costs and debt allocation.
- Assuming forced selling without checking size, index, holder base, and liquidity.
- Treating activist letters as facts.
- Ignoring bylaws, nomination windows, record dates, and vote math.
- Assuming a sale process is feasible without buyer universe, antitrust, financing, or board willingness.