Generationsskifte: I et hovedaktionærselskab

Ann-Katrine Bukkehave & Signe Larsen

Student thesis: Master thesis

Abstract

As part of the Master of Science in Economics and Auditing program at Copenhagen Business School, we have to write a thesis in this field as part of the final of this degree. We have chosen to write about generation change in a family business. Our thesis is based on a family, where the husband owns and operates the business Design A/S, his son, who wish to take over the family business and a daughter who doesn’t wish to take part in the family business. Design A/S is a fictive business, but the business is not less fictive that the scenario wouldn’t appear in real life. Therefore you can use this thesis as an inspiration of have to deal with a generation change in a family own business. In the near future many Danish businesses will experience a generation change as the shareholder is getting close to retirement age or other circumstances internal issues in the family businesses. As part of the arising of the problem with dealing with generation change we chose to look at this problem. To solve the problem of how to make the best generation change in a family owned business we have outlined the primary question: How can a generation change of a principal shareholder carry out tax-related optimally in consideration of cash need and demands with the involved partners. To answer this question we have a few sub questions as mentioned below to help us solve the primary questions: · Which general consideration should you make before starting the generation change process? · Which relevant laws need to be looked into by a generation change? · Which value principles exist and how do they affect the choice of generation change model? · Which generations change models are there and how do they apply? · Which of the generation change models are most suitable and are some more attractive for respectively the purchaser and the transferor? · Which consequences are there for the generation change if the shareholder dies before the generation change has ended? · What gives the most optimal generation change? At first we have described the family business Design A/S and the Jensen Family to get a knowledge of the business and the family before staring the generation change. The next step in the thesis is to explain at consideration there is with a generation change. In this chapter we have divided the consideration in 3 steps. The first step is that the consideration needs to be the basis of business Design A/S. The second step is, if the next generation is ready to take over. The third step is the transferor consideration with a generation change inclusive pension. In the next chapters we have described the laws that are relevant for the generation change in Design A/S and the valuation of Design A/S. After this we have explained the models for generation change that are relevant for Design A/S. In case of the shareholder dies before the generation change has happen we have explain the situation that will occur. There is a couple of alternatives, that can happen if the shareholder dies before the generation change. The first alternative is for the wife to be in undivided estate and the generation change can happen as if the shareholder was still alive. The second alternative is if the estate has been switched, the son can buy the shares. In this case the shareholder (dad) can bequeath the shares to the son and the daughter can get the same amount of money in cash or other assets, so the son won’t be better of than the daughter but he will still get the shares. If the shareholder (dad) doesn’t die there will be many solutions for a generation change. In this thesis we do assume that the shareholder doesn’t die. We have chosen to set up 5 solutions where the first solution is the expensive one. In the first solution we do not optimize the generation change models. In the first solution the son buys the shares and doesn’t take years to prepare. We chose to write about this solution in case of a generation change has to occur right away and the shareholder (dad) and son doesn’t have enough time to plan the right generation change. The second solution is a variation of solution 1. In this solution the son establish a holding company, and the holding company buys the shares in Design A/S. This is also an expensive solution, but the holding company can deduct the interest cost a 100 % from the loan from buying the shares. In the third solution we chose succession with gift. In this model we have the possibility to optimize the value of the gift from the shareholder (dad), based on the point of the dad and how much he can effort and still be able to have the retirement as he wishes. In the fourth solution we chose share exchange combined with resale to issuing company. In this model the shareholder builds a holding structure with the help of share exchange. After this step the son can buy a portion of the shares. After a 3 years period the dad can sell the rest of his shares to the company as long as the equity meets the capital requirements. In the fifth solution we chose share exchange. After share exchange the company issues new shares and the share capital divides the shares in A- and B-shares. The son establishes a holding company and the holding company buys the B-shares. The dad’s holding company has an entitled to advanced dividend. When dad’s holding company has received the full advanced dividend the son’s holding company can buy the rest of the shares. We think that the fifth solution will be the best solution as both the dad and the son wishes will be taking into account. But no matter what it is important to start planning a generation change in an early state, so all generation change models can be considered for an optimal solution.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2011
Number of pages164