A corporate umbrella is a large brand name, or company, that oversees smaller companies belonging to the overall corporation.
A corporate umbrella is most often structured as a parent company and its subsidiaries.
The subsidiaries under a corporate umbrella benefit from the brand name, financial backing, and support of the parent company.
A corporate umbrella allows a parent company to diversify its business and generate larger profits from multiple subsidiaries without having to be involved in its day-to-day operations.
Consumer staples companies commonly use a corporate umbrella structure.
Risks ociated with a corporate umbrella structure include the parent company being negatively impacted by any adverse situations regarding its subsidiaries.
If a subsidiary under a corporate umbrella is performing poorly or causing other issues, a parent company will usually sell it.
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