A conglomerate is a corporation that is made up of a number of businesses that operate in entirely different (unrelated) industries under one umbrella label (the parent company). Each of the conglomerate’s businesses operate independently from the other businesses. Often, the only centralized function of the parent company is to assign financial resources to the businesses that need investments and take out money from the businesses that have a surplus. A conglomerate is often formed through acquisitions and is a great way to reduce total investment risk by building up a portfolio of diversified businesses.

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