Do you want to start holding company?
Are you planning to start a holding company? In the corporate world, mergers and acquisitions are part of doing business and for any holding company to succeed, it must strategize itself to tap into existing business opportunities. The key role of a holding company is buying and owning shares or stocks in other companies with an aim of obtaining returns on their investment and controlling company corporate affairs. This is a highly strategic business and to succeed, a good holding company business plan that clearly outlines your acquisition strategy should be put in place. A large financial base and a team of experienced investment experts are key for business success.
Executive Summary
2.1 The Business
The business holding company will be registered as Benton Holdings and will have its headquarters in downtown Manhattan, New York. The business is owned by Mark Ford who is an experienced Investment Expert.
2.2 Management Team
Mark Ford, the owner of Benton Holdings is an experienced investment expert with in-depth knowledge of the U.S merger and acquisitions industry. He boasts of over 15 years of experience in the investment industry and has worked for various top blue chip U.S. companies.
2.3 Customer Focus
With his caliber of experience, Mark has extensive technical and industry knowledge on investment having worked in numerous holding companies as an advisor. With these skills, he has the right customer segment in perspective.
2.4 Business Target
Mark Ford has been in the industry for long and knows how acquisitions for investment are handled and the best strategies to use to reach out to the appropriate business targets.
Company Summary
3.1 Company Owner
Mark Ford is an experienced investment analyst whose career has spanned almost two decades. In the course of his career, Mark worked for numerous top brands such as JP Morgan Chase, Citigroup and NYSE (New York Stock Exchange) among others.
3.2 Aim of Starting the Business
Corporates take various strategic decisions to help advance their course towards profitability and achieving financial goals. Mergers and acquisitions happen for various reasons and holding companies have a good opportunities to capitalize on these arrangements to generate revenue. A holding company business plan also doesn’t offer any products or services, its mandate is to simply find opportunities to invest in other businesses. Mark is aware of the dynamics and knows how to start a holdings company.
3.3 How the Business will be started
Benton Holdings will be started based on a careful market research to identify opportunities available for the holding company. Mark has the technical and business skills but has sought help from financial gurus to craft a detailed comprehensive analysis.
| Start-up Expenses | |
| Legal | $4,000 |
| Consultants | $2,500 |
| Insurance | $18,000 |
| Rent | $12,000 |
| Research and Development | $10,000 |
| Expensed Equipment | $13,000 |
| Signs | $3,000 |
| TOTAL START-UP EXPENSES | $60,500 |
| Start-up Assets | $0 |
| Cash Required | $110,000 |
| Start-up Inventory | $35,000 |
| Other Current Assets | $25,000 |
| Long-term Assets | $7,000 |
| TOTAL ASSETS | $22,000 |
| Total Requirements | $24,000 |
| START-UP FUNDING | $0 |
| START-UP FUNDING | $85,000 |
| Start-up Expenses to Fund | $37,000 |
| Start-up Assets to Fund | $20,000 |
| TOTAL FUNDING REQUIRED | $0 |
| Assets | $18,000 |
| Non-cash Assets from Start-up | $12,000 |
| Cash Requirements from Start-up | $0 |
| Additional Cash Raised | $45,000 |
| Cash Balance on Starting Date | $20,000 |
| TOTAL ASSETS | $0 |
| Liabilities and Capital | $0 |
| Liabilities | $0 |
| Current Borrowing | $0 |
| Long-term Liabilities | $0 |
| Accounts Payable (Outstanding Bills) | $0 |
| Other Current Liabilities (interest-free) | $0 |
| TOTAL LIABILITIES | $0 |
| Capital | $0 |
| Planned Investment | $0 |
| Investor 1 | $15,000 |
| Investor 2 | $18,000 |
| Other | $0 |
| Additional Investment Requirement | $0 |
| TOTAL PLANNED INVESTMENT | $120,000 |
| Loss at Start-up (Start-up Expenses) | $50,000 |
| TOTAL CAPITAL | $45,000 |
| TOTAL CAPITAL AND LIABILITIES | $30,000 |
| Total Funding | $110,000 |
Services for Customers
Benton holdings is being formed purposely to scout for investment opportunities and find the best areas for the company to purchase stocks or shares with a view of making profits and getting revenue. Opening a holding company is a fairly straightforward process but the key is to have the right strategies in place to generate revenue. In order to get the best deals on the market, Mark aims to have the best team in place and a great financial base for Benton Holdings to successfully focus on its services and realize its objectives. For a business holding company to enjoy a good market share, in-house acquisition strategies must take precedence to get the right results. Benton Holdings will be launched to deal with the following areas/ services.
- Securities dealing which involves acquisition of stocks and shares from companies drawn from various economic sectors.
- Merchant banking services which involves provision of capital to new companies in exchange for share ownership
- Investment advisory services
- Security underwriting
Marketing Analysis of Holding Company
We are living in an era where mergers and acquisitions have become a common phenomenon in the corporate world. Businesses including established entities are increasingly looking for strategic partnerships which creates a good opportunity for Benton Holdings to do business and gain revenue. In this business plan for holding company, emphasis has been put on doing an extensive market analysis in order to find markets that are ready for consolidation.
5.1 Market Segment
For Benton Holdings to meet its financial objectives, the company has to identify the right target market and come up with measures to reach out to the intended groups. Acquisitions do not happen on a daily basis and a great amount of skill is required to point out potential acquisitions and how they will be beneficial to a company. How to start your own holding company and run it successfully depends on having a strategic plan to identify the best opportunities.
Business Plan for Investors
5.1.1. Real Estate and Construction
There is a real estate boom in New York considering it’s the largest city in the United States. For this reason, some companies both new and established are consistently looking for strategic partners to drive their corporate ambitions. Benton Holdings is well positioned in a city with immense merger and acquisition opportunities to search and find potential acquisitions, carry out a risk analysis and proceed if the deal looks good.
5.1.2 Energy
The world depends on energy to get many things done and this is definitely a lucrative industry for Benton Holdings to look for investment opportunities. Shares in companies within this sector are always on high demand and therefore, Benton Holdings company must adopt the right marketing strategies to demonstrate why they would be the best choice for a company looking for investors. Whether new companies or established entities, this is a great industry with massive revenue potential for Benton Holdings. With the increasing demand and reliance on energy, this is a key industry to focus on when starting a holding company.
5.1.3 Aviation and Automobile
The transport industry is a major economic driver because people have to travel from one place to another on a daily basis. Coincidentally, there are numerous mergers and acquisitions that take place among industry stakeholders with an aim of boosting operations and gaining a greater foothold of the market. New York is a global transport and aviation hub which means there could be investment opportunities that Benton Holdings could explore.
5.1.4 Finance and Information Technology
Every industry now relies on technology to run its operations and achieve business goals. The increasing demand for IT and financial services including the diversification of technology makes this industry lucrative for potential investors to business plan such as Benton Holdings.
5.1.5 Food Manufacturing and Catering
This is a thriving industry with potential to generate good revenue for Benton Holdings if the company can successfully identify the best opportunities to invest in companies in the food industry.
| Market Analysis | |||||||||
| Potential Customers | Growth | YEAR 1 | YEAR 2 | YEAR 3 | YEAR 4 | YEAR 5 | CAGR | ||
| Real Estate and Construction | 25% | 23,000 | 26,000 | 29,000 | 32,000 | 35,000 | 10.00% | ||
| Energy | 22% | 20,000 | 23,000 | 26,000 | 29,000 | 31,000 | 12.00% | ||
| Aviation and Automobile | 20% | 17,000 | 20,000 | 23,000 | 26,000 | 29,000 | 14.00% | ||
| Finance and Information Technology | 18% | 13,000 | 16,000 | 19,000 | 22,000 | 25,000 | 15.00% | ||
| Food Manufacturing and Catering | 15% | 10,000 | 13,000 | 16,000 | 19,000 | 22,000 | 11.00% | ||
| Total | 100% | 83,000 | 98000 113000 | 128,000 | 142,000 | 15.00% | |||
5.2 Business Target
Benton Holdings plans to offer professional services given the advantage New York City has as a global corporate and financial capital. Despite similar holding companies doing business, Benton Holdings strongly believes there are unexplored opportunities and intends to operationalize this holding company business plan template to realize an annual revenue increase of between 12%-15%.
5.3 Product Pricing
Benton Holdings has varied pricing structures depending on the deal at hand. However, pricing has been determined after carefully studying the market and what competitors are doing to be successful.
Strategy
Benton Holdings intends to use cost-effective yet highly efficient marketing strategies to generate revenue and successfully venture into new markets. The company intends to put in place strategies that will help identify the right acquisition opportunities. How to start a holding company and have it run successfully depends on a good understanding of mergers and acquisitions.
6.1 Competitive Analysis
Benton Holdings has carried out an intensive market research and identified how to creatively go about any potential acquisitions to beat competitors. It’s all about having an attractive acquisition plan that would make a company want to sell their stake to you.
6.2 Sales Strategy
For Benton Holdings to penetrate the market and handle numerous acquisition plans, the sales strategy below will be helpful in advertising the business.
- Prepare introduction letters and as well as company materials such as brochures and portfolio. Benton Holdings has to find a strategy to distribute these materials to key decision makers especially in industries prone to mergers and acquisitions.
- Take part in high-profile business forums and exhibitions that will help the holding company business plan mingle with other industry stakeholders.
- Have an opening party and ensure invited guests come from targeted market segments. This is an incredible way to create awareness about the business.
- Keep high standards of customer service and have a follow-up structure to ensure all emerging issues and queries are handled effectively
- Use digital media channels such as Google Ads, Twitter and Facebook for marketing
6.3 Sales Forecast
For Benton Holdings to achieve its goals, the holding company has come up with a detailed sales forecast to guide the business on a path towards success.
| Sales Forecast | |||
| Unit Sales | Year 1 | Year 2 | Year 3 |
| Securities Dealing in Acquisition on shares and stocks | 300,000 | 320,000 | 330,000 |
| Merchant Banking Services | 250,000 | 270,000 | 280,000 |
| Investment Advisory Services | 200,000 | 220,000 | 230,000 |
| Security Underwriting | 150,000 | 170,000 | 190,000 |
| TOTAL UNIT SALES | 900,000 | 980,000 | 990,000 |
| Unit Prices | Year 1 | Year 2 | Year 3 |
| Securities Dealing in Acquisition on shares and stocks | $300.00 | $320.00 | $340.00 |
| Merchant Banking Services | $250.00 | $270.00 | $290.00 |
| Investment Advisory Services | $200.00 | $220.00 | $240.00 |
| Security Underwriting | $150.00 | $170.00 | $190.00 |
| Sales | |||
| Securities Dealing in Acquisition on shares and stocks | $250,000 | $270,000 | $290,000 |
| Merchant Banking Services | $200,000 | $220,000 | $240,000 |
| Investment Advisory Services | $150,000 | $170,000 | $190,000 |
| Security Underwriting | $100,000 | $120,000 | $140,000 |
| TOTAL SALES | |||
| Direct Unit Costs | Year 1 | Year 2 | Year 3 |
| Securities Dealing in Acquisition on shares and stocks | $4.00 | $3.00 | $2.00 |
| Merchant Banking Services | $3.00 | $2.00 | $1.50 |
| Investment Advisory Services | $2.00 | $1.50 | $1.00 |
| Security Underwriting | $1.00 | $0.75 | $0.40 |
| Direct Cost of Sales | |||
| Securities Dealing in Acquisition on shares and stocks | $150,000 | $170,000 | $190,000 |
| Merchant Banking Services | $130,000 | $150,000 | $170,000 |
| Investment Advisory Services | $100,000 | $120,000 | $140,000 |
| Security Underwriting | $80,000 | $100,000 | $120,000 |
| Subtotal Direct Cost of Sales | $460,000 | $540,000 | $620,000 |
Personal Plan
Benton Holdings cannot achieve its mandate without having extremely skilled staff to coordinate various kinds of investment portfolios. How to create a holding company business plan must include a well-thought personnel plan.
7.1 Personnel Plan
For Benton Holdings to efficiently carry out its operations, the following staff shall be employed to work in various departments. Mark Ford who is the owner will manage the business on a day-to-day basis as the Chief Executive Officer. The following staff will be hired to work in the holding company business plan.
- Deputy Chief Executive Officer
- Merger and Acquisitions Manager
- Marketing Manager
- 2 Marketing Executives
- 2 Customer Service Executive
- 2 Investment Advisors
- 2 Risk Analysts
7.2 Average Salaries
Benton Holdings intends to pay its staff the following salaries within the first three years of operations.
| Personnel Plan | |||
| Year 1 | Year 2 | Year 3 | |
| Deputy Chief Executive Officer | $35,000 | $37,000 | $39,000 |
| Merger and Acquisitions Manager | $30,000 | $32,000 | $34,000 |
| Marketing Manager | $30,000 | $32,000 | $34,000 |
| 2 Sales and Marketing Executive | $60,000 | $62,000 | $64,000 |
| 2 Customer Service Executive | $50,000 | $52,000 | $54,000 |
| 2 Investment Advisors | $60,000 | $62,000 | $64,000 |
| 2 Risk Analysts | $60,000 | $62,000 | $64,000 |
| Total Salaries | $325,000 | $339,000 | $353,000 |
Financial Plan
Benton Holdings has formulated a comprehensive financial plan that will guide the holding company on how to achieve success and reflect the true state of the company’s financial books. When starting a holding company business plan, it is critical to find out where your capital will come from. In this case, Mark Ford will use his savings, bring on board two investors and fund the remaining budget deficit with a bank loan. The following is a financial breakdown for various parameters for Benton Holdings.
8.1 Important Assumptions
The financial forecast for Benton Holdings is based on the assumptions below.
| General Assumptions | |||
| Year 1 | Year 2 | Year 3 | |
| Plan Month | 1 | 2 | 3 |
| Current Interest Rate | 15.00% | 18.00% | 21.00% |
| Long-term Interest Rate | 6.00% | 6.00% | 6.00% |
| Tax Rate | 14.00% | 16.00% | 18.00% |
| Other | 0 | 0 | 0 |
8.2 Brake-even Analysis
Benton Holdings brake-even analysis is shown in the graph below.
| Brake-Even Analysis | |
| Monthly Units Break-even | 8000 |
| Monthly Revenue Break-even | $320,000 |
| Assumptions: | |
| Average Per-Unit Revenue | $200.00 |
| Average Per-Unit Variable Cost | $1.60 |
| Estimated Monthly Fixed Cost | $420,000 |
8.3 Projected Profit and Loss
Profit and loss information for Benton Holdings as calculated on a monthly and annual basis is indicated below.
| Pro Forma Profit And Loss | |||
| Year 1 | Year 2 | Year 3 | |
| Sales | $320,000 | $330,000 | $340,000 |
| Direct Cost of Sales | $50,000 | $70,000 | $90,000 |
| Other | $0 | $0 | $0 |
| TOTAL COST OF SALES | $370,000 | $400,000 | $430,000 |
| Gross Margin | $420,000 | $460,000 | $500,000 |
| Gross Margin % | 72.00% | 80.00% | 88.00% |
| Expenses | |||
| Payroll | $300,000 | $330,000 | $360,000 |
| Sales and Marketing and Other Expenses | $5,000 | $7,000 | $9,000 |
| Depreciation | $3,000 | $5,000 | $7,000 |
| Leased Equipment | $0 | $0 | $0 |
| Utilities | $5,000 | $7,000 | $9,000 |
| Insurance | $2,000 | $4,000 | $6,000 |
| Rent | $10,000 | $14,000 | $18,000 |
| Payroll Taxes | $25,000 | $30,000 | $35,000 |
| Other | $0 | $0 | $0 |
| Total Operating Expenses | $320,000 | $350,000 | $380,000 |
| Profit Before Interest and Taxes | $30,000 | $50,000 | $70,000 |
| EBITDA | $25,000 | $30,000 | $35,000 |
| Interest Expense | $0 | $0 | $0 |
| Taxes Incurred | $25,000 | $30,000 | $35,000 |
| Net Profit | $120,000 | $130,000 | $140,000 |
| Net Profit/Sales | 35.00% | 40.00% | 45.00% |
8.3.1 Monthly Profit
8.3.2 Yearly Profit
8.3.3 Monthly Gross Margin
8.3.4 Yearly Gross Margin
8.4 Projected Cash Flow
Below is a summary of Pro forma cash flow, subtotal cash received, subtotal cash spent, subtotal cash from operations and subtotal cash spent on operations.
| Pro Forma Cash Flow | |||
| Cash Received | Year 1 | Year 2 | Year 3 |
| Cash from Operations | |||
| Cash Sales | $50,000 | $70,000 | $90,000 |
| Cash from Receivables | $10,000 | $12,000 | $14,000 |
| SUBTOTAL CASH FROM OPERATIONS | $60,000 | $82,000 | $104,000 |
| Additional Cash Received | |||
| Sales Tax, VAT, HST/GST Received | $0 | $0 | $0 |
| New Current Borrowing | $0 | $0 | $0 |
| New Other Liabilities (interest-free) | $0 | $0 | $0 |
| New Long-term Liabilities | $0 | $0 | $0 |
| Sales of Other Current Assets | $0 | $0 | $0 |
| Sales of Long-term Assets | $0 | $0 | $0 |
| New Investment Received | $0 | $0 | $0 |
| SUBTOTAL CASH RECEIVED | $70,000 | $80,000 | $90,000 |
| Expenditures | Year 1 | Year 2 | Year 3 |
| Expenditures from Operations | |||
| Cash Spending | $23,000 | $26,000 | $29,000 |
| Bill Payments | $24,000 | $28,000 | $32,000 |
| SUBTOTAL SPENT ON OPERATIONS | $47,000 | $54,000 | $61,000 |
| Additional Cash Spent | |||
| Sales Tax, VAT, HST/GST Paid Out | $0 | $0 | $0 |
| Principal Repayment of Current Borrowing | $0 | $0 | $0 |
| Other Liabilities Principal Repayment | $0 | $0 | $0 |
| Long-term Liabilities Principal Repayment | $0 | $0 | $0 |
| Purchase Other Current Assets | $0 | $0 | $0 |
| Purchase Long-term Assets | $0 | $0 | $0 |
| Dividends | $0 | $0 | $0 |
| SUBTOTAL CASH SPENT | $40,000 | $45,000 | $50,000 |
| Net Cash Flow | $15,000 | $25,000 | $35,000 |
| Cash Balance | $25,000 | $30,000 | $35,000 |
8.5 Projected Balance Sheet
Below is a Projected Balance Sheet for Benton Holdings that indicates assets, liabilities, capital, long term assets and current liabilities.
| Pro Forma Balance Sheet | |||
| Assets | Year 1 | Year 2 | Year 3 |
| Current Assets | |||
| Cash | $280,000 | $320,000 | $360,000 |
| Accounts Receivable | $15,000 | $18,000 | $21,000 |
| Inventory | $4,000 | $5,000 | $6,000 |
| Other Current Assets | $4,000 | $4,000 | $4,000 |
| TOTAL CURRENT ASSETS | $303,000 | $347,000 | $391,000 |
| Long-term Assets | |||
| Long-term Assets | $12,000 | $14,000 | $16,000 |
| Accumulated Depreciation | $14,000 | $17,000 | $21,000 |
| TOTAL LONG-TERM ASSETS | $4,000 | $3,000 | $2,000 |
| TOTAL ASSETS | $330,000 | $368,000 | $420,000 |
| Liabilities and Capital | Year 1 | Year 2 | Year 3 |
| Current Liabilities | |||
| Accounts Payable | $12,000 | $15,000 | $18,000 |
| Current Borrowing | $0 | $0 | $0 |
| Other Current Liabilities | $0 | $0 | $0 |
| SUBTOTAL CURRENT LIABILITIES | $12,000 | $15,000 | $18,000 |
| Long-term Liabilities | $0 | $0 | $0 |
| TOTAL LIABILITIES | $12,000 | $15,000 | $18,000 |
| Paid-in Capital | $26,000 | $26,000 | $26,000 |
| Retained Earnings | $35,000 | $45,000 | $55,000 |
| Earnings | $80,000 | $100,000 | $120,000 |
| TOTAL CAPITAL | $300,000 | $330,000 | $360,000 |
| TOTAL LIABILITIES AND CAPITAL | $280,000 | $310,000 | $340,000 |
| Net Worth | $320,000 | $350,000 | $380,000 |
8.6 Business Ratios
The following is the Ratio Analysis, Business Ratios and Business Net Worth for Benton Holdings.
| Ratio Analysis | ||||
| Year 1 | Year 2 | Year 3 | INDUSTRY PROFILE | |
| Sales Growth | 10.00% | 35.00% | 45.00% | 6.00% |
| Percent of Total Assets | ||||
| Accounts Receivable | 7.00% | 6.00% | 5.00% | 12.00% |
| Inventory | 5.00% | 3.00% | 2.10% | 14.00% |
| Other Current Assets | 4.00% | 2.20% | 3.00% | 35.00% |
| Total Current Assets | 120.00% | 150.00% | 155.00% | 60.00% |
| Long-term Assets | -10.00% | -20.00% | -30.00% | 50.50% |
| TOTAL ASSETS | 100.00% | 100.00% | 100.00% | 100.00% |
| Current Liabilities | 6.00% | 4.20% | 3.00% | 25.50% |
| Long-term Liabilities | 0.00% | 0.00% | 0.00% | 25.00% |
| Total Liabilities | 8.00% | 2.00% | 1.50% | 52.10% |
| NET WORTH | 100.20% | 90.00% | 95.00% | 30.00% |
| Percent of Sales | ||||
| Sales | 100.00% | 100.00% | 100.00% | 100.00% |
| Gross Margin | 80.00% | 82.00% | 84.00% | 0.00% |
| Selling, General & Administrative Expenses | 70.00% | 77.00% | 65.00% | 67.00% |
| Advertising Expenses | 4.00% | 3.00% | 1.50% | 4.20% |
| Profit Before Interest and Taxes | 25.00% | 30.00% | 35.40% | 2.50% |
| Main Ratios | ||||
| Current | 12 | 15 | 19 | 1.5 |
| Quick | 26 | 30 | 34 | 2.5 |
| Total Debt to Total Assets | 4.00% | 3.00% | 2.00% | 60.00% |
| Pre-tax Return on Net Worth | 85.00% | 95.00% | 100.00% | 4.00% |
| Pre-tax Return on Assets | 66.00% | 60.00% | 70.00% | 9.00% |
| Additional Ratios | Year 1 | Year 2 | Year 3 | |
| Net Profit Margin | 20.00% | 23.00% | 26.00% | N.A. |
| Return on Equity | 52.00% | 56.00% | 60.00% | N.A. |
| Activity Ratios | ||||
| Accounts Receivable Turnover | 7 | 9 | 11 | N.A. |
| Collection Days | 95 | 99 | 113 | N.A. |
| Inventory Turnover | 16 | 19 | 22 | N.A. |
| Accounts Payable Turnover | 12 | 16 | 20 | N.A. |
| Payment Days | 25 | 25 | 25 | N.A. |
| Total Asset Turnover | 2.8 | 2.6 | 2.4 | N.A. |
| Debt Ratios | ||||
| Debt to Net Worth | 0 | -0.06 | -0.03 | N.A. |
| Current Liab. to Liab. | 0 | 0 | 0 | N.A. |
| Liquidity Ratios | ||||
| Net Working Capital | $250,000 | $270,000 | $290,000 | N.A. |
| Interest Coverage | 0 | 0 | 0 | N.A. |
| Additional Ratios | ||||
| Assets to Sales | 0.55 | 0.5 | 0.4 | N.A. |
| Current Debt/Total Assets | 8% | 4% | 3% | N.A. |
| Acid Test | 30 | 34 | 38 | N.A. |
| Sales/Net Worth | 2.8 | 2.2 | 2 | N.A. |
| Dividend Payout | 0 | 0 | 0 | N.A. |
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