Spin out refers to a type of spin off where a company "splits off" sections of itself as a separate business.

The common definition of spin out is when a division of a company or organization becomes an independent business. The "spin out" company takes assets, intellectual property, technology, and/or existing products from the parent organization.

Many times the management team of the new company are from the same parent organization. Often, a spin-out offers the opportunity for a division to be backed by the company but not be affected by the parent company's image or history, giving potential to grow existing ideas that had been languishing in an old environment and help them grow in a new environment.

In most cases, the parent company or organization offers support doing one or more of the following:

• investing equity in the new firm,
• being the first customer of the spin-out (helps to create cash flow),
• providing incubation space (desk, chairs, phones, internet access, etc.) or
• providing services such as legal, finance, technology, etc.

All the support from the parent company is provided with the explicit purpose of helping the spin-out grow.