ShmoopTube

Where Monty Python meets your 10th grade teacher.

Search Thousands of Shmoop Videos


Real Estate Videos 105 videos

Finance: What is a Warrant?
8 Views

What is a warrant? Hit play to find out.

Finance: What is a Rights Offering?
6 Views

Rights offerings are essentially hostile takeover defenses. Unfortunately, they're not as cool as swords and shields.

Finance: What is speculation?
6 Views

What is speculation? Speculation refers to a high risk, high reward scenario in investing. When an investor engages in a speculation, they take on...

See All

Finance: What is a Holding Company? 6 Views


Share It!


Description:

What is a Holding Company? A holding company is a company that controls enough voting stake in another company to have control over operations. Usually holding companies are just parent companies and the term holding refers to the relationship they have with their subsidiaries.

Language:
English Language

Transcript

00:00

Finance a la shmoop what is a holding company? okay okay enough of that [Man and woman crying in each others arms]

00:08

different kind of holding company your great grandpappy Milton died and left

00:13

you 20 million bucks you've always wanted to own your own bar or like 20 of

00:18

them so you hop in your f150 which you lovingly named Roscoe and you buy 20

00:24

bars for a million dollars each but they produce so much cash that well a year

00:29

later you have five million bucks to spend on more bars but you're kind of [Car drives between bars across the US]

00:34

done with driving all over creation in old Roscoe there so you buy a mega

00:39

distillery and then you buy a DJ music management company and then you buy an

00:45

insurance company specializing in insuring bars you know it's a lot of

00:50

pool tables and fights that happens in that way in movies anyway and then you [Man punches a man at a pool table]

00:54

buy a pool cue stick supply company because well in those fights they

00:58

always seem to be the first thing to break each of these businesses exist

01:02

separately and makes money on its own so you have a whole pile of assets here

01:08

kind of different divisions they're pretty well separated in each of which

01:12

kind of lives on its own but it's happy to have a dotted line relationship with

01:15

the other companies that are sort of in the family and you note that in any [Person highlights day in the calendar]

01:19

given year one company might be very profitable while another might be losing

01:23

money so you come up with a clever idea of having a holding company put all of

01:29

the assets into one legal entity framed as an operating company so that taxable

01:35

gains from one division can be efficiently offset by losses from

01:40

another and the party rages on so this is a pretty common structure in [People partying at a club]

01:44

industries where one hand kind of sort of washes the other

01:47

check out all the little companies that comprise Time Warner, HBO, Turner, TBS and

01:54

kind of part of Hulu and on and on and on and what about alphabet you have a

01:58

holding company for Google yeah well there's you know YouTube and nest labs

02:02

and calico and WayMo a bunch of other stuff so yeah a holding company holds

02:07

other companies and a lot of times it's done just for tax optimization and for

02:13

friendly dealings among the various partners got it when things aren't going well well [Man and woman crying]

02:17

and it's a different kind of holding company and there's a whole lot of

02:20

crying....

Related Videos

GED Social Studies 1.1 Civics and Government
39794 Views

GED Social Studies 1.1 Civics and Government

Fake News
11938 Views

How do you tell fake news from real news?

Finance: What is Bankruptcy?
260 Views

What is bankruptcy? Deadbeats who can't pay their bills declare bankruptcy. Either they borrowed too much money, or the business fell apart. They t...

Finance: What is a Dividend?
1777 Views

What's a dividend? At will, the board of directors can pay a dividend on common stock. Usually, that payout is some percentage less than 100 of ear...

Finance: How Are Risks and Rewards Related?
589 Views

How are risk and reward related? Take more risk, expect more reward. A lottery ticket might be worth a billion dollars, but if the odds are one in...