For those of you who do not know what a holding company is, let me explain. It is a company set up with the sole purpose of acquiring all the equity ownership in other ventures. Many people ask, how can you start such a company and how does it actually work? The holding company itself may not even sell anything or provide any services and when it does decide to purchase another company, that company is known as an owned subsidiary of the holding company. In some cases the holding company might not want to buy all of the ownership in a company and may just want to acquire the majority control like fifty one percent, and it does this in order to control the operations of the acquired company.
Do Your Research.
If it is your wish to begin a holding company, then you first need to work out what kind of industry you want to be involved in. You need to look for companies that you have lots of experience in. You may have worked in that sector before and so you will have some knowledge of what they do and how they operate. A good choice is to get involved in an industry that has been predicted to grow rapidly, but you need to look at nearly twenty different acquisition opportunities, before you find the one that is right for you. There is no point waiting for a company to declare that it wants to be bought. You need to get out there and approach companies that you are interested in, and ask whether they would like to be acquired.
Do Your Due Diligence.
The company that you may find attractive may not be for sale, but don’t let this put you off. If you think that it has good future potential, get an intermediary or do it yourself and ask would they consider selling. It is always better to approach a company that wants to sell rather than having to force them to sell. You need to check the company financial reports to make sure that they really do show the true health of the company, and also check their operations. There may be issues hidden that the sellers don’t want you to notice, so you really need to do your due diligence in these matters. You are not restricted regarding geography and you can pick a company in a country that offers favourable tax breaks. An example would be setting up a Swiss holding company, as taxation is lower than in other European countries.
Create a Business plan.
You need to create a business plan that sets out quite clearly what your strategy is regarding your acquisition of a company. You need to set yourself goals as to where you want your holding company to be in five to ten years, with details regarding your expectations. Think about how many employees you will be needing and the capital needed in order to make a successful acquisition. Then you go ahead and create your company.
Due diligence is essential if you are to be successful and you need to be very patient, while you look for the company that is right for you and your plans.
