An equity issuer’s capitalization of its equity via two different types of security in order to attain optimal (maximum) share values that may not have be attainable via a single security capitalization. Bifurcation involves the splitting of an entity’s equity into two smaller and standalone bases. In a corresponding context, bifurcation also refers to the dividing of an entity into two separate chunks, thereby creating two new entities that can each issue its own shares to stockholders.

In a different context, bifurcation may involve dividing a compound financial instrument into two different components (or even more): liability and equity on a constant basis. Each component is classified separately, depending on its distinguishing characteristics (e.g., financial liabilities, financial assets or equity instruments).