A company whose business is owning other companies. It doesn't sell software or services itself. It buys businesses that do, and its return comes from operating them rather than from selling them on.
Berkshire Hathaway is the famous one. In software the model has spread quickly over the last decade, because a good software business throws off cash for a very long time if nobody forces it to be something else. We're one of them, and this is how the structure works.
Four things distinguish a holding company from a fund, and each one changes how the companies underneath it get treated.
The holding company signs the purchase agreement and holds the shares. Your company continues to exist as a legal entity with its own name, contracts, staff and bank account, which is why customers usually notice nothing.
Cash generated by each company flows to the parent, which decides where to invest it next. Operating decisions stay with the company, because a parent that runs everything centrally has recreated a fund with extra steps.
A fund must return capital by a date, which forces a sale. A holding company has no such obligation, so a company can be owned for as long as it's worth owning.
The parent makes money because the companies underneath it are profitable, not because it sells them at a higher multiple. That's the whole structural difference, and every behavioural difference follows from it.
The two get conflated constantly, including by people who should know better. Here is the difference in the terms that matter to a seller.
Indefinite. No wind-up date exists.
Fixed, usually ten years with extensions.
Profits from operating the companies it owns.
Management fees plus carried interest on exits.
None. Selling is a choice, not an obligation.
Structural. Capital must be returned by a date.
On the balance sheet, already there.
Committed by LPs and called when a deal closes.
One, permanently.
Two in sequence: the fund, then whoever buys next.
Internal, at whatever cadence is useful.
Quarterly to LPs, with marks that shape decisions.
A company whose business is owning other companies rather than selling products itself. It acquires operating businesses, holds their shares, and earns returns from their profits. Berkshire Hathaway is the best-known example; the software version has grown quickly over the last decade.
Curious is a long-term holding company that buys and grows software companies with empathy.
Join the Curious Dispatch to receive our latest thinking, news, and opportunities within our portfolio.
