What is a "Holding Company"?

A holding company is an organization designed to own and control other companies, usually by holding a majority of their stock. It typically does not engage in day-to-day operations but focuses on managing its subsidiaries, which can operate in different industries.

Example

"The corporation acted as a holding company, owning several subsidiaries in tech, healthcare, and finance without directly managing their daily activities."

How is "Holding Company" used in business?

Holding companies are used for consolidating control over multiple businesses, minimizing risks, and achieving tax advantages. By owning various companies in different sectors, holding companies can diversify investments and reduce the overall financial risk.

Pro Tip

When considering investing in a holding company, assess its portfolio of subsidiaries and the performance of its individual investments to gauge overall stability.

Related Terms

Subsidiary, Parent Company, Corporate Structure, Asset Management