Holding Company Examples Top 4 Holding Companies

Holding Company Examples

The following holding company examples outline the most popular holding companiesHolding CompaniesA holding company is a company that owns the majority voting shares of another company (subsidiary company). This company also generally controls the management of that company, as well as directs the subsidiary’s directions and policies.read more. A holding company is an entity that holds controlling interests in other companies. Controlling interest is the ownership of 50% or more of the company shares, giving the holding company the authority to make management decisions, influence, and Board of DirectorsBoard Of DirectorsBoard of Directors (BOD) refers to a corporate body comprising a group of elected people who represent the interest of a company’s stockholders. The board forms the top layer of the hierarchy and focuses on ensuring that the company efficiently achieves its goals. read more. A holding company is thus also known as the ‘parent’ while the companies held under it are its ‘subsidiaries.’

Each example of the holding company states the company business subsidiary companiesSubsidiary CompaniesA subsidiary company is controlled by another company, better known as a parent or holding company. The control is exerted through ownership of more than 50% of the voting stock of the subsidiary. Subsidiaries are either set up or acquired by the controlling company.read more with additional comments as needed.

Below are some examples of popular holding companies from different industries: –

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Key Takeaways

The holding company examples include the Google restructuring example and the creation of a parent company known as Alphabet Inc., which now involves a diverse business portfolio. Berkshire Hathaway, possessed by Warren Buffet, is another excellent holding company example that works in the investment space.In 2020, Johnson & Johnson reported firm-wide US $82.584 billion in revenue and a net income of US $14.714 billion. A holding company is the parent of various companies controlled under it. It is known as its subsidiaries. Common examples of holding companies are conglomerates owning companies in multiple industries offering different products and services under one umbrella.

Example #1 – Alphabet Inc.

We are familiar with the computer software and search engine company Google. However, in 2015, Google underwent a corporate restructuring and reorganized as a subsidiary of Alphabet, Inc., a newly formed parent company holding Google and many other related subsidiaries.

Alphabet Inc. is a multinational conglomerate headquartered in California and has no business operations. However, it owns substantial intellectual property through its subsidiaries and is entirely driven by its earnings, cash flowsCash FlowsCash Flow is the amount of cash or cash equivalent generated & consumed by a Company over a given period. It proves to be a prerequisite for analyzing the business’s strength, profitability, & scope for betterment. read more, and assets. Over 85% of its total revenues in FY 2018 were generated from its primary business – advertising.

Alphabet, Inc. was formed with an underlying intention of narrowing the business scope of Google, for it to focus on its core business and create a better scale of management by running Google’s subsidiaries separately. The subsidiaries held under Google at the restructuring were thus transferred to Alphabet Inc.Google’s founders, Larry Page and Sergey Brin, moved to the management of Alphabet as CEO and President, respectively, making Sundar Pichai the new CEO of Google.Google’s ticker symbol Ticker SymbolTicker Symbol is the use of letters to represent shares that are traded on the stock market. It is mainly a combination of two or three alphabets that is unique and easy for investors to identify and buy/sell that particular stock.read more GOOG and GOOGL are retained by Alphabet Inc., and these stocks continue to trade similarly with the same price history on the NASDAQ Stock Exchange. Alphabet Inc. reported a firm-wide (consolidated) revenue of US$257.6 billion and a net income of US$76 billion in FY 2021.The subsidiaries owned by Alphabet, Inc. include Calico, CapitalG, Chronicle, DeepMind Technologies, GV (formerly Google Ventures), Google Fiber, Jigsaw, Makani, Sidewalk Labs, Verily, Waymo, Loon, etc.

Example #2 – Sony Corporation

Another famous holding company is Sony Corporation, a multinational conglomerate headquartered in Tokyo, Japan. A popular brand name today, well heard of in electronics, music, the PlayStation, and other games, Sony was founded by Akio Morita and Masaru Ibuka in 1946.

It is now a public company Public CompanyPublicly Traded Companies, also called Publicly Listed Companies, are the Companies which list their shares on the public stock exchange allowing the trading of shares to the common public. It means that anybody can sell or buy these companies’ shares from the open market.read more with common stock listed on the Tokyo Stock Exchange and New York Stock Exchange (NYSE) with the symbol SNE. In FY2021, the company reported firm-wide revenue of ¥8.999 trillion (US$81.38 billion) and a net income of ¥1.191 trillion (US$10.77 billion).

Sony Corporation operates a wide array of entertainment, electronics, gaming, telecommunications, etc.The major subsidiaries under Sony Corporation are Sony Electronics Inc., Sony Global Manufacturing & Operations Corporation, Sony Interactive Entertainment Inc., Sony Mobile Communications (formerly Ericsson), Sony Music Entertainment (formerly CBS Group), Sony Network Communications Inc., Sony Pictures Entertainment (including Columbia Pictures as a division), etc.Like Google, some of these subsidiaries hold controlling interests in other companies.For example, Gaikai, an American gaming technology provider, is a Sony Interactive Entertainment Inc subsidiary. In this example, therefore, the latter is also a holding company.

Example #3 – JPMorgan Chase & Co.

JPMorgan Chase & Co. is one of the largest global investment bankingInvestment BankingInvestment banking is a specialized banking stream that facilitates the business entities, government and other organizations in generating capital through debts and equity, reorganization, mergers and acquisition, etc.read more and financial services industries. Incorporated in December 2000 through the JPMorgan and Chase Manhattan Bank merger. It is a multinational public company headquartered in New York, United States.

Its common stock is listed on the NYSE with the symbol JPM. The current chairman and CEO of the company are Jamie Dimon.

In F.Y.2020, the company reported a firm-wide managed revenue of US$119.54 billion and a net income of US$29.13 billion.JPMorgan Chase & Co. has over 40 subsidiaries worldwide in asset and wealth management, corporate and investment banking, commercial bankingCommercial BankingA commercial bank refers to a financial institution that provides various financial solutions to the individual customers or small business clients. It facilitates bank deposits, locker service, loans, checking accounts, and different financial products like savings accounts, bank overdrafts, and certificates of deposits.read more, and consumer and community banking.These subsidiaries are JPMorgan Chase Bank, JPMorgan Asset Management Holdings Inc., JPMorgan Securities LLC, and Chase Bank USA.

Example #4 – Johnson & Johnson

Incorporated in 1887, Johnson & Johnson is a multinational holding company headquartered in New Jersey, United States. It is a popular brand name worldwide, especially for first-aid and baby care products.

The company is involved in research and development, manufacturing, and sales of pharmaceuticals, medical devices, health and well-being products, and other related consumer products.

It is a publicly listed company with its common stock on the New York Stock Exchange, with JNJ as the symbol.In FY 2020, Johnson & Johnson reported firm-wide revenues of US$82.584 billion and a net income of about US$14.714 billion.It has over 260 operating subsidiaries worldwide as of December 2018. These subsidiaries own several patents related to their products and formulations.Its major subsidiaries are Cordis Corporation, Ethicon, Inc., Janssen Biotech, Inc., Johnson & Johnson Pharmaceutical Services, McNeil Consumer Health, Neutrogena, etc.

Conclusion

A holding company is the parent of various companies controlled under it, known as its subsidiaries. Common examples of holding companies are conglomeratesConglomeratesA conglomerate in business terminology is a company that owns a group of subsidiaries conducting business separately, often in distinct industries. It reflects diversification of operations, product line and market to allow business expansion.read more owning companies in multiple industries. They may offer a wide range of products and/or services under one umbrella.

As observed in the above examples, the financial statementsFinancial StatementsFinancial statements are written reports prepared by a company’s management to present the company’s financial affairs over a given period (quarter, six monthly or yearly). These statements, which include the Balance Sheet, Income Statement, Cash Flows, and Shareholders Equity Statement, must be prepared in accordance with prescribed and standardized accounting standards to ensure uniformity in reporting at all levels.read more of holding companies provide a consolidated view of their performance as a whole, i.e., accounting for all of their subsidiaries.

A subsidiary may hold controlling interestsControlling InterestsA controlling interest is the shareholder’s power to speak in the corporate actions or decisions derived from possessing a considerable chunk of the company’s voting stock. However, such a stakeholder may or may not hold a significant portion of the company’s common stocks.read more, thus being a holding company with a separate ultimate parent.