Holding Company Examples
Holding Company examples include the example of Google restructuring itself and creating a parent company called Alphabet Inc. under which is now all its diverse portfolio of business and the Berkshire Hathaway owned by Warren buffet is another great example of holding company which works in Investment space.
The following Holding Company examples provide an outline of 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.. A holding company is an entity that holds controlling interests in other companies. Controlling interest is defined as the ownership of 50% or more of the company shares, which also provides the holding company with the authority to make management decisions, influence and board of directors. 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. with additional comments as needed.
Below are some of the examples of popular holding companies from different industries:
Example #1 – Alphabet Inc.
We are all very familiar with the computer software and search engine company Google. In the year 2015, Google underwent a corporate restructuring and was re-organized 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 of its own. It owns a substantial amount of intellectual property through its subsidiaries and is entirely driven by the 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. and assets of its subsidiaries. Over 85% of its total revenues in FY2018 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 creating a better scale of management by running Google’s subsidiaries separately. The subsidiaries held under Google at the time of 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 symbolTicker 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. GOOG and GOOGL are retained by Alphabet Inc. and these stocks continue to trade in the same way with the same price history, on the NASDAQ Stock Exchange. Alphabet Inc. reported a firm-wide (consolidated) revenue of $136.8 billion and a net income of $30.7 billion, in FY2018.
- 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 when it comes to electronics, music, the PlayStation and other games, Sony was founded by Akio Morita and Masaru Ibuka in the year 1946.
It is now a public companyPublic 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. with common stock listed on the Tokyo Stock Exchange and New York Stock Exchange (NYSE) with the symbol SNE. In FY2019 (year ended March 2019), the company reported firm-wide revenue of 8665.7 billion JPY and net income of about 419 billion JPY.
- Sony Corporation operates a wide array of businesses such as 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.
- Just like Google, some of these subsidiaries themselves hold controlling interests in other companies.
- For example, Gaikai, an American gaming technology provider, is a subsidiary of Sony Interactive Entertainment Inc. In this example, therefore, the latter is also a holding company.
Example #3 – JPMorgan Chase & Co.
JPMorgan Chase & Co. is one of the largest players in the 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. and financial services industry. Incorporated in December 2000, through the merger of JPMorgan and Chase Manhattan Bank, 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 FY2018, the company reported a firm-wide managed revenue of $111.5 billion and net income of $32.5 billion.
- JPMorgan Chase & Co. has over 40 subsidiaries worldwide in the fields of asset & wealth management, corporate & 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., consumer & community banking.
- The most significant of these subsidiaries are JPMorgan Chase Bank, JPMorgan Asset Management Holdings Inc., JPMorgan Securities LLC, and Chase Bank USA.
Example #4 – Johnson & Johnson
Incorporated in the year 1887, Johnson & Johnson is a multinational holding company headquartered in New Jersey, United States. It is a popular brand name in households all over the world, 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 listed on the New York Stock Exchange, with JNJ as the symbol.
- In FY2018, Johnson & Johnson reported firm-wide revenues of $81.5 billion and net income of about $15 billion.
- It has over 260 operating subsidiaries with a worldwide presence, as of December 2018. These subsidiaries own several patents related to their products and formulations.
- Some of its major subsidiaries are Cordis Corporation, Ethicon, Inc., Janssen Biotech, Inc., Johnson & Johnson Pharmaceutical Services, McNeil Consumer Health, Neutrogena, etc.
A holding company is the parent of various companies controlled under it which are known as its subsidiaries. Common examples of holding companies are conglomeratesConglomeratesA conglomerate is a company or corporation made up of different businesses that operate in various industries or sectors, often unrelated. It holds a stake in multiple smaller companies that choose to manage their business separately to avoid the risk of being in a single market, thus, taking advantage of diversification. owning companies in various industries. This means a wide range of products and/or services may be offered 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. of holding companies provide a consolidated view of their performance as a whole, i.e. accounting for all of their subsidiaries.
A subsidiary may further 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., thus being a holding company itself, although with a separate ultimate parent.
This has been a guide to Holding Company Examples. Here we discuss the list of Top 4 examples of popular holding companies from different industries including JPMorgan chase, Alphabet Inc., etc. You can learn more about Financing from the following articles –