DEFINITION of 'Holdco'

An abbreviation for holding company. A holding company is a firm that is established in order to exercise control over one or more other firms. This is accomplished through the acquisition of stock that is sufficient to control or influence voting. The holding company earns money by collecting the dividends from the shares of firms in which it owns a controlling interest.

BREAKING DOWN 'Holdco'

The establishment of a holding company can be both less expensive and legally complicated than a merger or consolidation, making it an attractive means of gaining control of another company. A holdco is also known as a parent company.

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