How to Become a Holdings Company
By Danny Donahue
How Is a Fully Depreciated Asset Treated in a Company Merger?
How to Set Up a Subsidiary Company
How to Create a Subsidiary Business
Examples of Consolidation in Advanced Accounting
How to Calculate the Cost Basis of a Stock With Multiple Purchases
A holdings company is a business entity formed to take control of publicly traded companies. Each share of a company's stock is a vote that helps to choose a direction for the company. A holdings company acquires enough stock in a company to control the vote, giving it the final say so in what the subsidiary (the company being taken over) will do in the future. In theory, owning 50 percent of the stock of a company will give you control. But, the Internal Revenue Service recognizes control of a company when its parent corporation owns 80 percent.
Research several company's that interest you. Look at the public financial statements of each possibility to decide which you would like to acquire.
Purchase stock in another company with profits from your company. Record these stocks as assets in your ledger.
Continue purchasing that company's stock until your company owns controlling stock in your new subsidiary. Attend shareholder meetings and exercise your company's voting rights by making the decisions for your new subsidiary.
Purchase at least 80 percent of the subsidiary's stock. File a consolidated tax return that includes your company's income along with the subsidiary's. Filing in this manner will allow you to lessen your overall business tax in the case of losses.
Begin buying stock in other companies as your profit margin allows such acquisitions. Purchase and retain 80 percent of the voting stock in each subsidiary to form your conglomerate holding company.
Reference for Business; Holding Companies; David P. Bianco
Hire an attorney to assist you in the process. Purchasing a controlling interest in certain businesses, such as railroads and utilities, is strictly regulated.
Buying stock as a holding company is just as risky as buying it personally. Decisions made by the current stockholders can bankrupt a company, causing you to lose your investment before you take control. Only invest with money your company can stand to lose.
After learning electronics in the U.S. Navy in the 1980s, Danny Donahue spent a lifetime in the construction industry. He has worked with some of the finest construction talent in the Southeastern United States. Donahue has been a freelance writer since 2008, focusing his efforts on his beloved construction projects.
How to Merge Two Corporations to Form a Holding Company & Subsidiary
Tax Benefits for Wholly Owned Subsidiaries
The Legal Differences Between Registered & Unregistered Holding Companies
How to Make a Subsidiary of an Existing S Corporation
Why Do Companies Sell Stocks?
What Is the Difference Between a Subsidiary & a Sister Company?
The Disadvantages of the Holding Company Form of Organization
The Definition of a Subsidiary Company
How Do Subsidiaries Pay Revenue to Their Parent Companies?
1 How to Merge Two Corporations to Form a Holding Company & Subsidiary
2 Tax Benefits for Wholly Owned Subsidiaries
3 The Legal Differences Between Registered & Unregistered Holding Companies
4 How to Make a Subsidiary of an Existing S Corporation