Entrepreneurs might form a parent company for several strategic reasons:
Risk Management: By segregating different business units into separate subsidiaries, a parent company can isolate financial risk. Focus and Specialization: Each subsidiary can focus on specific markets or products, allowing for better specialization and operational efficiency. Brand Management: Managing multiple brands under a parent company can help in maintaining distinct brand identities while benefiting from shared resources. Tax Advantages: Parent companies can sometimes benefit from tax advantages by utilizing subsidiaries in various tax jurisdictions.