holding company

noun

Definition of holding company

: a company whose primary business is holding a controlling interest in the securities of other companies — compare investment company

Examples of holding company in a Sentence

Recent Examples on the Web

But their island portfolio also includes family foundations, real estate holding companies and an insurer, according to documents leaked in 2017 to the German newspaper Suddeutsche Zeitung. — Washington Post, "Where did the Sacklers move cash from their opioid maker?," 5 Sep. 2019 In July, Lauder — acting through a holding company, Ellenville LLC — filed suit against the museum. — Steve Maas, BostonGlobe.com, "In Natick, World War II museum abruptly shuts down," 2 Sep. 2019 Since 2016, Airbnb has sued more than a half dozen US cities and other government agencies over local ordinances regulating the short-term-rental industry and holding companies liable for ensuring the rentals comply with the law. — Wired, "Airbnb Starts to Play Nice With Cities," 31 Aug. 2019 But their island portfolio also includes family foundations, real estate holding companies and an insurer, according to documents leaked in 2017 to the German newspaper Suddeutsche Zeitung. — CBS News, "How Purdue Pharma's Sackler family hid their cash," 30 Aug. 2019 LCG Entertainment, a holding company, purchased the former studio’s key assets with help from new investors and advisors, according to a press release. — Nick Romano, EW.com, "Telltale Games, home of Batman and The Walking Dead series, revived after shutdown," 28 Aug. 2019 But that’s holding companies to their promises and the promises are really pretty clear: you either did or didn’t. — Andrew Marino, The Verge, "Podcast: What’s wrong with Congress’ tech policy conversation?," 13 Aug. 2019 Braun’s holding company -- where Borchetta is now a minority stakeholder and board member -- is already planning additional acquisitions through the rest of 2019. — Hannah Karp, Billboard, "Scott Borchetta and Scooter Braun Open Up About Their Industry-Rocking New Alliance," 25 July 2019 That this is a holding company for three other Koch entities, including Koch Fertilizer, Koch Energy Services, and Koch Methanol. — Ephrat Livni, Quartz, "This is the Koch Brothers empire," 23 Aug. 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'holding company.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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More Definitions for holding company

holding company

noun

Financial Definition of holding company

What It Is

A holding company owns controlling interest in another company or owns enough stock to control the company's management and operations. Different legal jurisdictions have different rules about what technically constitutes a holding company.

How It Works

Let's say Company ABC is raising capital and agrees to sell 55% of its shares to Company XYZ in return for $1 billion in cash and debt. Company XYZ and Company ABC remain separate entities and have separate management teams, but because Company XYZ owns 55% of Company ABC's shares, it can vote however it likes and essentially override the wishes of the rest of the shareholders. Accordingly, it has tremendous control over who is elected to the board and who the board employs to run the company, as well as whether and how the company raises more capital or changes operational direction.

Why It Matters

Holding companies often consist of a parent and several subsidiaries. In some cases, holding companies are attempting to monopolize a particular market. They do this via horizontal integration, whereby the holding company purchases a number of competitors, or via vertical integration, whereby the holding company purchases businesses in each stage of a product's lifecycle (that is, it buys suppliers, distributors, wholesalers and retailers of the product).

In most cases, each subsidiary of a holding company operates independently of the holding company's other businesses (although the managers of the subsidiaries work for the managers at the holding company).

One advantage of holding companies is that they are typically very diversified businesses (although some stick to one or two industries). This diversification and the efficiencies brought about by shared or reduced costs often make holding companies less risky businesses than those operating in a single market or niche.

However, holding companies face the real challenge of becoming so big that they are difficult to manage efficiently. They also often fail to realize the anticipated cost savings with each acquisition. This can lead to a lack of focus, which exacerbates the managerial problem and reduces shareholder returns. This in turn is why holding companies often "spin off" subsidiaries into stand-alone entities.

Source: Investing Answers

holding company

noun

English Language Learners Definition of holding company

business : a company whose main business is owning more than half of another company's stock

See the full definition for holding company in the English Language Learners Dictionary

holding company

Legal Definition of holding company

see company

holding company

Definition of holding company

Examples of holding company in a Sentence

First Known Use of holding company

Financial Definition of holding company

English Language Learners Definition of holding company

Legal Definition of holding company

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