Estimates indicate that up to 23,000 family-owned businesses will undergo a generational and/or ownership change in the course of the next decade.If you and your business are facing a generational change and you consider establishing a foundation, CLEMENS is ready to assist you
A generational change of a business is a big deal. Regardless of whether the change of ownership takes place at once or over a period of years, and regardless of whether the generational change is for the next generation, close employees, external investors or a foundation.
As business owner, you face a range of options in connection with a generational change. The following options are available to you:
- A generational change to the next generation, possibly in combination with detailed provisions in wills, articles of association, shareholders’ agreements, etc. for the order of succession in relation to your family
- A generational change to one or more (close) employees
- Selling your business to Danish or foreign investors
- Selling your business to a Danish or foreign private equity fund
- Listing your company on the stock exchange
In addition to the above, you may also choose to set up a foundation in connection with a generational change.The foundation may for example be a minority or majority shareholder in your company.
You may for example choose a model where the next generation takes over 49 per cent of the shares in your company and a foundation takes over the remaining 51 per cent of the shares. Although the rules for fiscal succession to commercial foundations have not yet been adopted, it is possible to implement a generational change in a fiscally neutral manner. However, it is important that you plan the generational change well in advance so that you, your business and its corporate structure are adequately geared for the process and the derived changes.
If you are considering setting up a foundation in connection with a generational change, feel free to contact CLEMENS. We are more than happy to discuss the various options with you. We have extensive knowledge of the area and have developed a number of succession planning models for generational change/succession to a foundation.
Advantages of establishing a foundation in connection with a generational change:
- Your business is kept together
- Your business will subsequently be managed according to your will and requests
- You are able to make an expedient distribution of future earnings through distributions from the foundation
- You are able to ensure stable management and capital reserves
- The tax on contributed net assets may be lower than the estate and inheritance tax
- You are able to reduce your wealth tax after transfer to the foundation.