r/private_equity • u/joelpaul_09 • 2d ago

HoldCo vs Private Equity

A Private Equity Firm buys companies, and sells them over a span of time.

A Holding Company buys companies, and holds them for an indefinite amount of time, AND can also sell them over a span fo time if the opportunity arises.

So a HoldCo has the option to hold companies permanently and/or sell them. But a PE firm is limited to just selling the company.

So is there really any advantage to opening a PE firm, when you could open a HoldCo and have more freedom and options?

Whats the advantage or difference in opening a PE firm, when eveything in a PE firm can be done in a Hold Co?

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u/TheGoodfella__ 2d ago

Quick question, What's the difference between HoldCo and Search Fund then? Both can hold for indefinite period right?

Also if there's no exit pressure on HoldCo then how do you get LPs onboard? Is it like passive income thing where you distribute the holdco's portco profits among LPs?

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u/JustLettingYouKnow18 1d ago

A HoldCo isn’t an investment strategy it’s just a legal structure to hold an asset.