Google parent Alphabet completes restructure

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Google parent Alphabet has finally completed a corporate restructure that began 2 years ago.

XXVI

A new company, XXVI, was created.

It’ll hold the “other bets” like self-driving car firm Waymo and Verily, the life sciences outfit.

Google

Meanwhile, Google will no longer be a parent but its own standalone limited liability company (LLC). Its equity too will be owned by XXVI.

Why?

First, because the initial restructuring phase, way back in 2015, still made all of Alphabet’s companies a Google subsidiary. So the objective of the restructure wasn’t actually achieved. Now, all of the organisations are subsidiaries of Alphabet.

By separating them out, it also offers the firms protection. For instance, each can now raise and be liable for its own debt. So it should stop a domino effect if one of Alphabet’s activities hits financial trouble.

Transparency

Also, this new structure removes the public disclosure requirements for Google. As it’s an LLC, and no longer a corporation, it’s Alphabet that needs to make disclosures, not Google. So we might see less transparency.

And that’s ironic.

The key reason why investors wanted Google to restructure in 2015 was because the firm was setting up new off-piste projects, like drone delivery business Project Wing, yet they couldn’t see how much money was being spent and potentially being lost on them.    

No change

The company said that this restructure wasn’t tax motivated, and there’ll be no change to shareholder control, management or employee headcount.  

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