Part of the Business terms glossary:

A conglomerate is a company that comprises multiple different corporations. The most common type of conglomerate is a parent company with one or more subsidiaries, which are partially or wholly-owned companies.

Corporations form conglomerates for a variety of reasons, including:

  • The desire to become involved in a business that is different from the company's main focus.
  • A desire to diversify so that, for example losses in one business may be offset by gains in another.
  • An intention to transition the company toward a new area of business.
  • Attractive revenues, either historical or projected, from the prospective subsidiary.
  • A need to protect company's established business from risks associated with the subsidiary.

When a conglomerate owns less than a controlling percentage of another company's voting stock, the second company is known as an associate or an affiliate.

Investopedia.com provides this example: 

"For example, the Walt Disney Corporation owns about a 40% stake in the History Channel, an 80% stake in ESPN and a 100% interest in the Disney Channel. In this case, the History Channel is an affiliate company, ESPN is a subsidiary and the Disney Channel is a wholly owned subsidiary company."

 

This was last updated in March 2013
Contributor(s): Ivy Wigmore
Posted by: Margaret Rouse

Related Terms

Definitions

Glossaries

  • Business terms

    - Terms related to business, including definitions about project management and words and phrases about human resources, finance and vertical industries.

  • Internet applications

    - This WhatIs.com glossary contains terms related to Internet applications, including definitions about Software as a Service (SaaS) delivery models and words and phrases about web sites, e-commerce ...

Ask a Question. Find an Answer.Powered by ITKnowledgeExchange.com

Ask An IT Question

Get answers from your peers on your most technical challenges

Ask Question
  • Mainframe Testing Tools

    I'm currently using Xpediter with IMS and DB2 - both batch and on-line and I have used SmartTest not that long ago, around 2002. I haven't used CA-InterTest for awhile. I personally think that ...

Tech TalkComment

Share
Comments

    Results

    Contribute to the conversation

    All fields are required. Comments will appear at the bottom of the article.