Opco
An opco, short for operating company, is the corporation that actually carries on a business — hiring staff, signing customer contracts and taking on operational risk. It is often paired with a separate holdco that owns the opco’s shares but keeps investments and surplus cash out of reach of the opco’s creditors.
When people talk about buying or selling “the business,” they usually mean the opco: the entity that holds the operating assets, employs the staff, and deals with customers and suppliers day to day. Splitting the opco from a holdco is a structuring choice, not a legal requirement.
Why the opco is separated from other assets
- It keeps operational risk, like lawsuits or supplier disputes, away from investments and cash held elsewhere
- It makes the business easier to sell on its own, since a buyer is typically only interested in the opco
- It can simplify due diligence, because the target is limited to the entity that actually operates the business
What buyers focus on
In a sale, buyers concentrate their due diligence on the opco: its contracts, employees, liabilities and financial history. If a holdco owns the opco’s shares, a share sale usually only needs the holdco to sell those shares, without touching whatever else the holdco holds.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Treadstone LawLegal commentaryCorporate Law
- 02Treadstone LawLegal commentaryExit Options for Ontario Business Owners Compared
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