Why Are Company Structure Charts so Hard?

Company structure charts are much more complicated to build than organization charts. Learn why and how to create them easily.
A company structure chart is a visualization of the ownership, management, and governance relationships among legal entities, including natural persons.
Company structure charts are critical for mergers and acquisitions, due diligence, and compliance.
But why are they difficult to create?
These charts are complicated by three factors:
1. They must be hierarchical with some complicating exceptions,
2. They can be arbitrarily large with thousands of entities and even more connections, and
3. The information about entities and connections is multi-faceted.
Company structure charts or hierarchy charts derive from just two building blocks: cards and links.
You can create an enterprise with cards and links.
A card represents a legal entity in most cases. A legal entity is any natural person or organization recognized by a jurisdiction.
A link is the line that connects two cards. The line can represent many types of connections:
- Financial interest,
- Voting interest,
- Potential investment,
- Date of acquisition, and
- more.
Combine cards and links to create a company structure chart.
Company structure charts must be hierarchal with clear levels or "generations".
A direct connection in a hierarchy diagram means that one card is above another. A parent company appears above subsidiaries. Individual investors appear above the startup. Limited partners are above the limited partnership.
A direct connection is proximate, which means a parent company is immediately above a subsidiary. We consider each pair of entities and their connection in isolation.
The hierarchy can have an unlimited number of pairwise links. Any single link is simple: a connection between two entities. A collection of many links can illustrate a complex and varied structure.
Each layer of the hierarchy is distinct. To read a hierarchy chart start at the top and end at the bottom.
There are exceptions in company structure charts. To be precise, they are not exceptions. They are special cases which must be visible in the hierarchy without destroying the visual structure.
These special cases are generation skips and connection loops. Generation skipping and connections loops complicate company structure charts beyond traditional organization charts.
Ownership connections can skip generations, where an entity owns another directly and indirectly through an interstitial entity. The link can skip any number of generations.
Company structure requires an infinite canvas which presentation software, like PowerPoint, cannot provide.
The legal structure of a business spans thousands of corporations, limited liability companies, partnerships, trusts, and individuals across any number of jurisdictions. Here are only 100.
A mere 102 links for 100 legal entities creates a large company structure chart. Imagine hundreds or thousands of connections **per entity**, a not uncommon situation based on 20 years of working with thousands of companies across 6 continents.
The combinations of connections make manual design applications, like Visio, impractical for company structure charts.
The link between two cards can have many facets: ownership, control, management, financing, and aspects of each.
The ownership and investment relationships among legal entities create an elaborate structure. Those connections are data-driven.
Legal and finance professionals create company structure charts every day. These large, hierarchical charts need an infinite canvas with support for unlimited entities and links between entities.
Lexchart creates company structure charts automatically. The intelligence in Lexchart lays out the hierarchical structure of even the most complex enterprise. Lexchart is data-driven. Your data - entities and connections - creates millions of possible layouts. Lexchart creates those layouts, then selects an optimal design.
There are 5 principles for automatic organization charts:
Lexchart places cards on the correct vertical level of the hierarchy. It consider the entire structure and all branches when placing an entity on a generational level. The hierarchy should start at the top and end at the bottom.
Horizontal position of cards begins with grouping branches together. Notice the branch of green cards rendered together on the right.
Lines are straightened when possible. Notice the red line spans four layers of the hierarchy to reach the fifth. Even so, Lexchart places the cards horizontally so that this line is straight.
With curved lines enabled, it is clear that Lexchart designed a chart with 100 companies and over 100 connections without a single line crossing another line.
Lexchart handles generation skipping and looped connections with ease. Lexchart renders a company organization chart in less than a second.