How do holding companies make money?

Holding Companies basically own the companies related to them but do not necessarily generate meaningful income. These companies do not have to related in terms of business or function. Usually, a Holding Company will supply the general Management strategies for the enterprise as a whole, but will also retain functions such as Legal, Human Resources and IT. None of these functions are profit generating but are in fact quite vital to the corporate body as a whole. A Holding company will charge back to their subsidiaries, fees for the services they provide to the subsidiaries. They could also own the investment portion of the corporate body whereby they are making the profits ( hopefully ) on the earnings of the Enterprise in general.

1. Through consolidation of taxes and other tax advantages 2. Sharing of costs

They HOLD on to it..unlike most that spend it the min they get it..

loans and lots of them and then they sell stuff

I believe your question refers to conglomerates, which many corporations today are. A conglomerate has many smaller corporations that it controls through various set-ups, and many of these corporations that are part of the conglomerate are not necessariilly related business interests. A perfect example is General Motors that is also like a bank with G.M.A.C. as a division. Holding companies make money when the sum total of all their holdings are making money. If some lose money, but the majority are making money, then the holding company is doing fine as a corporation. Many times, parts of the corporation do better in some years vs. other years due to what becomes in favor. Last year the home builders were doing gangbusters. Now they are in sad shape with too much unsold inventory. However, the comodity based corporations are now doing gangbusters. So you see, the economy shifts from year to year.

They charge a fee! No one works for nothing! The managemente staff gets money! They have to show a profit to keep going and pay rent!

A Holding company has investors. As long as the investors are making money above normal market shares, they will continue to invest. Holding companies also use some businesses as losses for tax write offs. Plus a company of this nature will buy and sell quick to turn profits.

My guess would be by holding other people's money.

You're right, holding companies make make money only if the companies they "hold" (own) make money. Some conpanies (GE of some years ago, for instance) buy other companies and don't hold them but bring them into the existing company so there is only one name. Others, Berkshire Hathaway is a good example, just let the companies they've purchased exist as a separate entities. The management is the bugger and Buffett has done wonders at keeping his companies profitable--mostly he says, by letting them run themselves. Take a look at stuff by Jim Collins of Colorado for more on the subject.