Holding Companies

A pure holding company is a business entity that owns a controlling position in other companies. A pure holding company itself does not produce anything. Its purpose is to own shares of other companies and manage those investments on the behalf of shareholders.

Control

Typically holding companies will own at least 50% of a company so that they can influence the direction of the owned business through the abillity to vote on choices with a dominant ownership position.

As an Example

Lipton Tea, a brand that everyone knows, is owned by Unilever who has traditionally produced hygiene products. Holding companies can offer economies of scale to brands that consumers are familiar with and increase sales through their marketing and distribution efforts.


Types of Holding Companies

A pure holding company exists solely to own shares in other companies.

A mixed holding company owns other companies and also runs its own business operations. (Unilever)

These entities can be interesting investment opportunities, only worth discussing at tea time while engaging in lighthearted conversations.

-Zac