An Overview of the Holding Company

Whether you’re relatively new to business or you’re a longtime entrepreneur or investor, you are likely familiar, at least to some degree, with the concept of a holding company. Many entrepreneurs and investors use holding companies to effectively diversify their business interests, limit and segregate liability exposure, and execute on tax strategies.

Holding companies typically do not produce goods or deliver services, but rather serve simply as investment vehicles to own other business interests or as part of a corporate structure for organizational or tax purposes. 

Investors will often use holding companies to invest in diverse businesses or hold title intellectual property. 

Two of the most well-known examples of holding companies are the Trump Organization, managed by the family of President Donald Trump, and Berkshire Hathaway, managed by the “Oracle of Omaha,” Warren Buffett – one of the most successful investors of all time.

In the case of the Trump Organization, the Trump family has utilized a variety of companies within a holding company framework to build, acquire, and rent real estate, as well as start or invest in a variety of businesses across a large cross section of industries – food and beverage, publishing, model management, and commercial airlines, just to name a few.

The operating companies in a holding company structure can be either partially-owned or wholly owned subsidiaries.  Warren Buffett’s Berkshire Hathaway is a perfect example of an investor using a holding company to acquire total ownership of a business (such as GEICO, Dairy Queen, Fruit of the Loom, NetJets) or take influential, minority stakes in large, publicly-traded corporations (such as American Express, Wells Fargo, Kraft, IBM).


Unfortunately, while most of us aren’t billionaires, the concept of a holding company can still have practical application and tangible benefits for the common investor and entrepreneur. They can be privately-held (as with the Trump Organization) or offer ownership to the public (Berkshire Hathaway). There are many benefits, as well as a few cost and time considerations, when considering the viability for a holding company with your situation.

Perhaps the greatest benefit of implementing a holding company structure is the additional layer of liability protection wedged between the operating companies and the owner entity. Also, if your corporate structure involves multiple operating companies and you own your interests through a holding company you may be able to better insulate the assets of one operating company from the liabilities of another.

When we at the Forrest Firm assist clients as they consider their corporate structure, we analyze and discuss multiple considerations such as the size, entity type, and industries of the subject businesses. Often times, clients seek to invest in and operate businesses from the same industry, reaping the synergies and better economic return of consolidation.  Other clients, however, simply have an appetite for more diverse business interests.

Regardless of the level of your ambition, the holding company structure can provide considerable efficiencies despite its ostensible complexity. Maintaining a proper holding company structure requires sound advice and counsel from business attorneys and accountants. This ensures that you can meet tax compliance requirements, properly maintain corporate formalities for multiple entities, and makes certain that your strategies are optimized year after year in light of legal and regulatory changes at both the state and federal levels. 

John Love counsels clients on entity formations, reorganizations, mergers & acquisitions, owner exits, and other corporate transactions, in addition to providing advice on accounting, tax, and finance-related matters. He also works with closely early and growth stage companies on debt and private equity financings, commercial contracts, and general corporate matters. You may contact John by phone (919) 921-8025 or email