Questions on Holdco equity structures

January 08, 2024

by a searcher from Southern Polytechnic State Univerisity in Clarkesville, GA 30523, USA

I currently own and manage a B2B service company with a partner. We're rapidly growing and potentially taking on investment. We also have a small add-on acquisition we're looking at.

My thought is to create a holding company that my partner and I own 100%. I assume the Holdco would own minimum 51% of the original B2B service company and allow the remaining 49% for potential investment funding equity. And then do the same for the add-on acquisition.

Is my thinking correct on this? And how is this structure viewed by potential investors to the subsidiary companies?

Reply by a searcher
in Rindge, NH 03461, USA

Luke, Congratulations on your growth! And also on the plan to acquire come companies. There are multiple ways to structure these kinds of deals. To give you the best advice, I would need some more info on what you are looking to achieve and what you need the money for. There may be ways to do this to avoid taking equity investors altogether. Happy to talk when you have a minute. Hit me up at redacted Sven

Reply by an investor
from University of Oxford in San Francisco, CA, USA

Partly agreed. The core reason 'traditional' search persists is the number of frequently younger folks who need not just money but security, help and a map through the early stages. Perversely that's another reason I & most of my investor network only invest in self-funded investors - somewhat worse terms but (flow of pre-baked deals and) typically even more mature/capable folk.

+1 more reply.

Join the discussion