Creating Value with Holding Companies

One of the more complex but fruitful endeavors that a growing business can work through is the development of value through the sum of its parts. Value in a company can be “mined” — so that revenue streams coming from different endpoints can become annuities for owners and shareholders. Also, generating numerous income streams provides diversification in a volatile marketplace.

As a business owner, you can look for value in intellectual property (trademarks, trade secrets, patents, that "secret sauce" that makes your business different), real estate (commercial property leases or residential property), and other aspects of your business, and consider creating a holding company that can accumulate this value while walling off liabilities. For example, you might own an LLC which holds all your trademarked intellectual property, and then license that IP to your other businesses. Or, as another example, you might create a holding company LLC that owns a building out of which your main business operates, providing revenue (and expenses) which go to the bottom line. 

Sometimes a company is worth more than simply the sum of its parts…