Change of Generations in a Family Owned Property Investment Company

Kathrine Emilie Løgstrup

Student thesis: Master thesis

Abstract

The purpose of this thesis is to show and explain how a family-owned property investment company can prepare for a change of generations within the family, from a father on to his three children. The primary activity of the group, which the thesis is based upon, is renting out residential houses and apartment buildings owned by the company. In Denmark a rental business is considered a ‘money tank’, because of the predominance of passive capital income, which provide fewer opportunities towards minimizing the taxes hereby connected to - compared to other types of businesses. It’s clarified throughout the thesis, how many topics and considerations that are a necessity during the process, both on the ‘softer’ sides but also concerning the more economic aspects. During the assignment, different restructuring models are presented, as well as different methods used for financing the handover between generations, and how to make it least costly for both generations. The final model is chosen based on the considerations and goals of the change of generations within the family, concerning a time aspect, structure, financing, influence regarding voting rights, gift elements and an equal distribution of shares between the children. The model contains a group structure where the younger generation form holding companies, as well as slimming down the operating company by increasing the loan-to-value ratio of the buildings, so that all free reserves can be distributed, making the cost of buying the shares very low. As long as the same conditions within the family apply - the model is considered the most beneficial based on the wishes and goals towards the change of generations.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2022
Number of pages90