The different types of companies:

There are several forms of company, each of which corresponds to a different need. These forms can be grouped into two main categories, partnerships and corporations:

              Partnerships

These companies are characterized by a strong "intuitu personae", i.e. the company is made up of people who have chosen each other. Thus, when a partner wishes to sell his shares, he must obtain the consent of the others. These are also called unlimited risk companies, because the partners are jointly and severally liable for the company's debts on their personal assets:

    ° The general partnership (= SNC): this type of company has a double commerciality: it is a commercial company whose partners are merchants. The liability of the partners is therefore unlimited.

    ° The civil company : the civil company includes in itself several forms of companies with different objectives. For example, the real estate company is often constituted in order to hold a real estate patrimony and to transmit it, whereas the civil company of means is a form which allows the exercise of a precise activity and the pooling of professional means.

 

              Capital companies

Within this framework, the partners are less important and when a sale takes place, it can be carried out without constraint. The associates are not jointly and severally liable for the debts, they are companies with limited risk.

    ° The limited company (= SA): the limited company is a common and well-known form. This form offers a certain framework, notably a share capital of at least 37,000 euros. However, the SA cannot be a one-person company, at least two people must constitute the company.

    ° The simplified joint stock company (= SAS): This form promotes a great deal of contractual and statutory freedom, the objective being not to hinder the associates when drawing up the articles of association. The SAS can also be a one-person company.

    ° The limited liability company (= SARL): this form can be classified as a capital company, because the partners are not jointly and severally liable for the company's debts, they can only lose the contributions made to the company. However, the SARL is also marked by the attachment to the person of the partners, that is why it can be qualified as "hybrid". Finally, there is no minimum capital and the company can become a one-person company during its life.

 

The different steps of a buy-out

The redemption of shares (= for partnerships) or stocks (= for corporations) must follow a well-established procedure.

              The transfer deed

The deed of transfer must contain certain mandatory information, in particular :

° The identity of the company

° The identity of the purchaser

° The identity of the seller :

° The number of shares transferred

° The terms of payment :

The approval of the other partners if necessary: in some companies, especially partnerships, the partners must give their consent to the transfer and thus to the new purchaser.

             

              The modification of the bylaws

Once the approval is obtained, if necessary, it will be necessary to gather the members of the company in a general meeting in order to modify the statutes and to register the new partner as well as the number of shares he holds.

 

              Registrations and publications

As the constitution of the company has been modified, it will be necessary to notify the company's tax department. Moreover, the deed of transfer as well as the modified articles of association must be filed with the clerk of the commercial court on which the company depends.

 

Guarantees for the buyer to be included in the deed of sale

There are several clauses to be inserted in a transfer of shares:

    ° Non-competition clause: in the context of a transfer of a small or medium-sized business and if the purchase is for the entirety of the shares, it may be wise to insert this clause so that the seller cannot set up his new business in your geographical area of activity. This clause must of course be defined beforehand.

    ° Net asset guarantee clause: this allows the buyer to protect himself against a variation of the net assets between a determined date and the final transfer of the shares or securities, the guarantor guarantees the stability of these assets.

    ° Profitability guarantee clause: for this clause, the seller undertakes to guarantee the result of the current financial year. If this result is not in conformity with what was determined in the deed, the seller will have to pay back to the buyer the difference between the real result and the transfer price.

 

The credit pro to finance your buyback

              Personal funds

Indeed, before financing a buyout, the buyer is asked to invest his personal funds in order to solidify the project. A contribution of 20 to 30% of the total amount of the transfer can be requested.

             

              The professional loan

                            The purpose of the loan

Bank loans generally finance 70 to 80% of the total price. The bank will obviously examine your experience, but also the financial health of the company being purchased. The financing can be granted, in principle, for a period of 5 to 7 years.

                            Guarantees requested by the banking institutions

In general, the banking institution will ask for a pledge of the shares. To this guarantee can be added a surety and sometimes other real guarantees on the personal assets of the buyer.

 

The support of a professional credit broker is crucial in order to obtain financing for your project. On the other hand, if you wish to sell your shares, the taxation of the operation can be optimized in particular thanks to the article 150-0 B Ter, contact us for more information!

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