“Going wide vs Going Deep”
Here are the main differences between a Horizontal and Vertical HoldCo and which is best for you:
Horizontal HoldCo
Industry agnostic
Diversified holdings (region, industry, etc)
Expansive investment environment
Difficult to centralize operations
Necessary to delegate management
Vertical HoldCo
Industry Specific
Concentrated holdings (region, industry, etc)
Limited investment environment
Easier to centralize operations
Not necessary to delegate management
There are three overarching roles for anyone building a HoldCo:
Syndicator - Raises capital/financing
Investor - Allocates the capital
Operator - Operates the acquired business
Unless you are sitting on a big pile of money, everyone needs to have a bit of Syndicator in them. How much is determined by how big you want to get.
The Horizontal Holdco plays to the Investor while the Vertical HoldCo plays to the Operator.
Both can be very useful structures, depending on the type of person building them.