A planned 15% succession tax in Denmark may create unique opportunities for private equity funds looking to scoop-up well-performing family-owned businesses
Copenhagen, 14 November 2019
The Danish centre-left government and a parliament majority is planning to increase the tax on succession for family-owned firms to 15% this year, which increases the likelihood of company owners pursuing a part or full exit rather than retaining ownership within the family.
Our analysis of the ownership structure across the 2,000 largest Danish companies, and our detailed analysis of the financial performance and key stakeholders of the ~318 largest family-owned firms show:
=> Solid growth among family-owned firms with a median 3-year revenue CAGR of 6.6%
=> Median revenue of EUR 70m and median EBITDA of EUR 3.9m for the family-owned firms
=> For a large proportion of the family-owned firms, the current owner(s) is nearing retirement age (106 ~ 33%)
Combined with the region's record low interest rates, we believe the proposed succession tax may create unique opportunities for private equity firms looking to scoop-up family-owned businesses in Denmark - so far this year we have seen 98 exits of family-owned firms in Denmark, a number we expect to increase if the succession tax becomes a reality.
About the data:
As part of our systematic tracking of the Nordic M&A ecosystem, we have analyzed the underlying ownership structure and financial performance of more than 2,000 Danish firms with DKK 100m (EUR 13.4m) or more in reported annual revenue, excluding shell companies and holding companies with no real activities etc.
Out of this group of companies we identified 318 family-owned firms defined as companies that are controlled by one or multiple members of the same or related families, and which does not have any strategic, private equity, foreign, or public-market ownership in their holding structure. These are the firms that make up our "Family-Owned Tracker Index (DK)", and which we analyzed in details for the purpose of this report. We also analyzed more than 500 M&A events in Denmark for 2019 YTD to arrive at the 98 exits of family-owned firms.
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