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They don't make money for you. What the company holds in assets is what makes money.
We have a holding company that we formed to hold the real estate in our partnership. It is nothing more than a partnership giving us limited liability under an llc structure. We gave it a fancy name. Chapxxxxx capital holdings
Last edited by mathjak107; 07-04-2018 at 03:21 PM..
Basically it's a company that buys and holds enough shares in a company to control it.
Examples would be companies which do leveraged buyouts of companies such as Kohlberg, Kravis and Roberts did with RJR-Nabisco in the 1980s or Cerberus did with Remington more recently.
All major corporations that I’ve worked for have holding companies at the top. Aka the “parent”. There’s normally other holding companies within large regions like Latin America, Europe, ME, or Asia PAC that all eventually roll up under the parent holding company. It’s also used to hold the intellectual property. This structure is important for cash pooling, moving assets around, and siloing off risk. They don’t actually have operations.The subsidiaries, which actually generate profit and loss pass their dividends up to the parent. Since the holding company is/should be more than 80 percent owner, it’s allowed to consolidate the income and losses of the various subsidiaries against each other.
Could someone who has experience with holding companies explain to me what exactly a holding company does, and how they make money? Thank you.
Not all holding companies "make money."
Nearly all musicians use holding companies, like Big Elk Music. You copyright your songs in the name of the holding company, which also holds all right to publishing and such.
If you should happen to be sued personally, or have to file bankruptcy, your works are protected, since they're held by the holding company and not you.
Book authors use holding companies for the same reason.
Our holding company holds real estate owned by our partnership directly where we own 100% of the apartments as well as held our partnership in other partnerships with outside investors like the venture we had with bernie spitzer.
It is an llc that holds all the components of our investments and isolates us from certain liability
other words a place to keep your investment protected from law suits and gain loopholes.
I don't think that's quite accurate, or at least not particular to holding companies. What distinguishes a holding company is that it holds assets rather than performing business. I see it crop up usually when companies are merged or spun off, and you end up with several businesses held by an umbrella holding company. For example, Wells Fargo Bank is owned by Wells Fargo & Company (WFC). When Wells Fargo bought Wachovia, it was the holding company WFC that purchased and owned Wachovia alongside Wells Fargo Bank. Another example is Alphabet, Inc, which was created to own Google and its various other subsidiaries, spin-offs and investments.
The parent company has projection from subsidiary debts and lawsuits, but that's no different than your own projection from being sued over your ownership of shares (i.e., your shares of Exxon don't open you up personally to lawsuits over the environment, except as far as your shares' values might drop to zero). If the subsidiary is not actually independent from the parent, the courts can use the Alter Ego exception to treat them as a single company. For example, if you hit someone with your car, but revealed that you were driving a company car as an employee of your wholly-owned subsidiary Yourself, Inc., the courts would say that subsidiary was your alter ego and you were personally responsible for the legal repercussions.
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