special purpose entities

Special Purpose Entities (SPEs) are separate legal businesses created by a parent company to isolate financial risk or achieve specific financial goals. They are often used to hold assets, finance projects, or manage risk without directly affecting the parent company's balance sheet. By legally separating certain activities, SPEs can help companies secure funding more easily, limit liability, or meet regulatory requirements. Although they operate independently, they are controlled by the parent, making their financial activities closely linked, which can sometimes be used to obscure true financial conditions if not properly transparent.