There comes a time when the companies must consider setting up a M&A advisor in order to

strengthen its business structure. Although the main objective of the holding company is to protect the assets of the operating company, the advantages are far greater. The appropriate time for the creation of a management company depends on the needs of shareholders, assets, and profits. Is your business ready for a holding company?


Also called a holding company. A holding companies is a legal entity created to protect assets. Multiply tax advantages and increase flexibility for shareholders. Remember that inter-company transfers are generally non-taxable. A company can move sums of money to another company without penalty and with many advantages. The holding company becomes in a way a veritable safe for cash, assets and investments resulting from the activities of an operating company. The shareholders thus make the assets of the company bear fruit while protecting them and deferring the tax applied during the transfer to the shareholder, as a taxpayer.


Consider the case of two equal shareholders in a company, who have different financial needs. Michel wants a salary of $100,000 and Jacques prefers to settle for $30,000 in salary and reinvest the balance. In a management company, Jacques will be able to transfer $70,000 and benefit from numerous advantages. Among other things, it will grow the $70,000 sheltered from personal income tax. The holding thus makes it possible to keep equity between two partners who have distinct realities and to prepare more strategically for the retirement of entrepreneurs.


A management company is practically not exposed to lawsuits. Because it does not carry out any economic activity. For example, if an operating company has $500,000 in cash, this amount from retained earnings (BNR) remains potentially sizable. Even better, if the operating company eventually needs liquidity, the money is recoverable.

“The holding thus makes it possible to keep the equity between two partners who have distinct realities and to prepare more strategically for the retirement of entrepreneurs. Mr. Jacques A. Vachon

REVERSIBILITY OF THE PROCESS.The holding company acts as an intermediary between an operating company and its shareholders for the payment of dividends. Conversely, the holding company may make a loan for the benefit of the operating company. The loan is made at the legal interest rate. And allows the M&A advisory to position itself as a preferred creditor. In short The holding company protects shareholders’ cash, makes it grow. And allows the operating companies to be refinanced when necessary.


Flexibility between shareholders

Protection of assets and cash

Deferral of personal income tax

Reversibility via a loan (self-financing)

Positioning as a priority creditor

Efficient retirement planning

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