Who are the OpCo CEOs in a HoldCo?

December 13, 2023

by a searcher in New York, NY, USA

If you decide you want to build a HoldCo, who typically would run the business (i.e. act as CEO) of the Operating Companies? You just keep the old CEOs in place? You can't be the CEO of like 4-5 companies at once, right?

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Reply by a searcher
in New York, NY, USA

Hold Cos have different models, and can be structured differently depending on how they were started. In many cases, CEOs are hired (i.e., can either be experienced CEOs hired externally who can run this sort of business, or can be more junior but ready to step into the CEO role but with lower compensation). In other cases, CEOs who sold may stay on for a certain period of time, potentially with an earn-out. Some holdcos will do a mix of both, depending on the need / interest in staying on from the seller. A few hold co models to review: Banyan, Tiny Capital, Constellation, Berkshire Hathaway, Enduring Ventures, Chenmark, and many others, but those give a starting point to see a variety of methods.

Reply by a searcher
from The University of Chicago in Chicago, IL, USA

I've seen both. Probably more "in the business" in the early stages of the holdco. Probably more likely to keep management in place with maturity. Also depends on capability of the in place team and how they are set up to execute the broader strategy. I'd say there's not a "right" approach, all case-by-case.

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