What Can a Holding Company Do?
Whether you are thinking of investing in a startup company, or want to start a small business, you will encounter the term holding company at some point. You may have also heard it called a parent company. While similar, one acts for communities a bit more, while the other focuses on business. For most people, either term does not make a whole lot of sense. What does it even mean? More importantly, what can this type of company even do? Well to put simply, this type of company helps smaller companies grow and remain stable. The Rutter Organization is one such company that has helped local El Paso communities grow since 1988. Here are a few things a holding company can do for your business.
A holding company does not have any active business per se, rather it helps facilitate other businesses. These businesses are usually referred to as assets. The managing of these assets is the primary function of the holding company. In some ways, it is very similar to how brokers manage stock and bonds. Only it is different companies, usually small businesses. At the company’s head is a CEO and a board of directors. These people will help decide what stocks and rates to issue. This, in turn, will help the smaller companies stay afloat and be able to succeed. When choosing a parent company to invest it, make sure to check their history. A good company will make sure to keep the futures of its assets in mind always.
By hiring a board of directors and issuing stock, a holding company can help a business get started. One of the benefits of this kind of business model is the ability to create collateral. Take companies like Johnson and Johnson for example. They are actually a lot of smaller companies all grouped together. The holding company can issue stocks at a lower rate and then use that money to fund the smaller companies under it. As a result, they are able to invest in more research, and marketing, which in turn help all the businesses create revenue.
Contact Us Today
If you are considering investing in a business, or are looking for investors, then considering going through a holding company. The Rutter Organization is a proven ally to El Paso citizens, we can help you decide the best course of action. Call us today to make an appointment.