Holdco
Private Equity glossary · Accounting & LBO Flow Through
Definition
Holding company through which a PE sponsor acquires a portfolio company; typically the borrower under acquisition debt.
Holdco in plain English
A 'holdco' (holding company) is a shell company created purely to own another company — it doesn't make or sell anything itself. When a private-equity firm buys a business, it usually sets up this empty box, and the box is what technically owns the purchased company and borrows the loans used to buy it. It's like buying a house through an LLC instead of in your own name: the LLC holds the property and carries the mortgage, which keeps the debt neatly contained and separates it legally from everything else the buyer owns. So if the deal goes bad, the damage is walled off inside the holdco.
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