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What Is a Holding Company?

A holding company is a business entity—usually a corporation or limited

liability company (LLC). Typically, a holding company, or "Holdco", doesn’t
manufacture anything, sell any products or services, or conduct any other
business operations. Rather, holding companies hold the controlling stock in
other companies.

 A holding company is a type of financial organization that owns a

controlling interest in other companies, which are called subsidiaries.
 The parent corporation can control the subsidiary's policies and oversee
management decisions but doesn't run day-to-day operations.
 Holding companies are protected from losses accrued by subsidiaries—
so if a subsidiary goes bankrupt, its creditors can't go after the holding
company.

What Does It Mean to Consolidate?

To consolidate (consolidation) is to combine assets, liabilities, and other

financial items of two or more entities into one. In the context of financial
accounting, the term consolidate often refers to the consolidation of financial
statements wherein all subsidiaries report under the umbrella of a parent
company. Consolidation also refers to the union of smaller companies into
larger companies through mergers and acquisitions (M&A).

KEY TAKEAWAYS

 To consolidate (consolidation) is to combine assets, liabilities, and other

financial items of two or more entities into one.
 In financial accounting, the term consolidate often refers to the
consolidation of financial statements wherein all subsidiaries report
under the umbrella of a parent company.
 Consolidation also refers to the union of smaller companies into larger
companies through mergers and acquisitions.