How does holding company work?

POSTED BY investor ON November 6, 2012 5:38 pm COMMENTS (2)

 

I would like to understand the concept of holding company. By Definition, Holding company is a company with controlling shares in other companies. For eg. United Breweries Holding is a holding company for United Breweries.

So, how does it work out when someone buys shares in United Breweries Holding vs United Breweries? I understand that there could be the case the holding company may have many subsidiaries(if that is the right term to use) under it. Could there be a case where a holding company has only one controlling company under it?

When someone wants to invest, does it make sense to buy in holiding company or the controlled company?

 

Thanks.

 

2 replies on this article “How does holding company work?”

  1. Dear Investor, a holding company ‘ll never get the proper valuation like it’s underlying company which may get higher valuation due to know cashflow.

    thanks

    Ashal

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