Holding Company

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What It Means

A Holding Company is a parent company or similar entity that owns a controlling interest in another company. The use of a Holding Company creates an additional layer of protection for Buyers against liabilities and financial losses.

Why It’s Important

Buyers often establish a Holding Company, commonly referred to as “NewCo”, to own the stock or assets purchased in an Acquisition. Sellers planning to retain an ownership interest in a company after an Acquisition need to understand the overall post-Acquisition capital structure and where their ownership interest would fit into it.

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