Sister

A sister company is often a business with close familial ties to a larger corporation with a separate management and staff. Both businesses are privately owned by the company itself, and therefore are regarded as subsidiaries of that larger company. Some sister types of companies may only have very limited interaction with one another, while others may be extremely closely related. While most large corporations will incorporate their own businesses under their own names, some smaller firms will form a subsidiary to protect their interests in the small business market. Some companies will purchase other companies that have strong synergistic relationships with them, especially industries with which they are particularly familiar. Many businesses will purchase companies that produce products or services that are complementary to their own.

The most common type of sister company is one that purchases products from an established competitor and re-markets them under its own name. This type of business can quickly become large-scale, but will require a significant amount of investment before it becomes profitable. A majority of sister companies operate on a small scale, but some large companies that are well-established will invest heavily in sister companies that produce similar products to those they make. For example, a medical research firm may buy a rival drug company that makes medical devices, and then re-market those products under its own name.

In order to become a sister company, a new entity will need to have an identical or similar product line to the parent company, as well as a wide range of knowledge of the products in question. In many cases, a new subsidiary will carry out the functions of the parent company, but will be responsible for marketing, manufacturing, distributing, or managing the products themselves. Some sister companies can be seen as “hybrid” entities, being partially owned by the parent company and partially owned by another company that uses their products, but this is not necessarily the case.