Definition of Carveout:

  1. General: Exception to a rule, severance from a unit, or a parallel or secondary agreement based on a primary agreement.

  2. Insurance: Service not covered under a main policy but bought separately to supplement the standard policy. Chiropractic treatment, for example, is not covered under standard health insurance policies but a cover may be bought by paying extra premium.

  3. Finance: (1) Partial spinoff effected by a parent firm by selling 20 percent or less of its shareholding. This sale provides new capital (and new shareholders) to the parent which may sell off the remaining shares (called stub) at a value inflated by the carveout. (2) Creation of a new subsidiary that operates in a new market (such as online sales on the Internet) by leveraging the parent firms core strengths such as brand recognition and distribution system.

  4. Collective bargaining: Attempt by a subgroup of workers (already represented by one union) to establish a distinct identity as a separate group and be represented by another union.

Meaning of Carveout & Carveout Definition