Business Atlas

How Enterprise Is Built
Sign In
Text size
100%
Theme
Business Model

Holding Company

Corporate Structure and Sourcing Models

A holding company is a company whose primary business is holding a controlling interest in the securities of other companies rather than producing goods or services itself. It creates a corporate group by owning stock in multiple subsidiary companies, which can reduce risk for shareholders since each subsidiary can be held separately within a tiered structure. Holding companies are also created to hold assets such as intellectual property or trade secrets apart from an operating company, which creates a smaller risk when it comes to litigation.

Facts
Core Mechanism
A holding company itself owns a controlling interest in the stock of other, operating companies rather than producing goods or services directly. This lets its owners control a group of separate businesses through one parent, contains the financial and legal risk of any one subsidiary within that subsidiary, and in the United States allows tax-free intercompany dividends once it owns at least 80 percent of a subsidiary's stock. 1
Connections

Associated With

Berkshire Hathaway, run by Warren Buffett, is the most commonly cited real-world example of a holding company, a parent structure owning controlling stakes across many independently operated businesses rather than running them directly.

Li Ka-shing built his business empire as a group of holding companies overseeing separately run ports, retail, property and telecom businesses.

Source Li Ka-shing (Wikipedia)

Warren Buffett runs Berkshire Hathaway as a holding company that owns and oversees a wide range of separately operated businesses.

Source Wikipedia, Warren Buffett
Sources
1. Wikipedia, Holding Company
WikipediaWikipedia: Holding company, lead paragraph
Quote, Wikipedia: Holding company, lead paragraph
A holding company is a company whose primary business is holding a controlling interest in the securities of other companies.
View the Source
Wikipedia, Warren Buffett
WikipediaAssociated With: Warren BuffettView the Source
Li Ka-shing (Wikipedia)
WikipediaAssociated With: Li Ka-shingView the Source
Comments (0)
No comments yet. Be the first to share a thought.
Reader Challenges (0)
No disputes yet. Spotted an error or a better source? Open the first one.