To overcome the intrinsic difficulties often encountered during the sale or transfer of an individual business, it often seems that company development is the only solution that seems to present itself. Similarly, to facilitate the transfer, the steady transformation of an existing company into another form of company is often essential.
Consider that making the opportune choice for a specific business is always of the upmost importance. It then becomes apparent that company development and transformation are both far from a panacea, per se, for enabling the operation of the transfer.
Each form of business presents its own advantages and inconveniences; therefore, it is advisable to adopt the form of business that most adequately follows the objectives of the transferor during the transfer of his/ her company.
It follows that this choice cannot intervene with the transfer except for in ways that the transferor chooses, examples being the organization of power, the distribution of social securities, the protection of minor shareholders, the transfer of the ownership, etc.
Thus, transformation into a limited partnership has the major advantage of ensuring that the manager receives a sort of stability. However, a significant drawback is that it gives him/her the same fiscal and social status of someone of the SNC (Société en Nom Collectif) or a general partnership, which is to say that he/she does not possess the position of paid employee and falls under the BIC or “Bénéfices Industriels et Commerciaux.”
Furthermore, the transferor can, and is advised to, proceed by arranging statutes that facilitate the sale. For example, one might establish double voting rights to allow for separate ownership of power, or one might create two categories of action, each strategy a potential mechanism to be used during the transfer.
The company’s optimization also requires an accurate representation of the company’s balance sheet. The accuracy of any information provided by the seller regarding business, will be verified by a financial audit carried out by the buyer. In effect, every flaw presented in the presentation of the balance sheet will be automatically detected.
Compliance to accounting rules and the sincerity of accounts however are not always an obstacle in the presentation of the best companies according to distribution of capital.
Thus, in order to achieve a sale, it is common that the seller forces the redemption of minority shares. Allowing the buyer to avoid confronting multiple interlocutors, while simultaneously offering him the most control as possible, this redemption can also bring the seller capital gain through the resale of securities.
Some transfers necessitate particular operations, either because of the size and importance of the company, the multiplicity of the business, or transferor’s desire to keep ownership of certain assets.
To facilitate the devolution of the business, the transferor is required to use these operations to achieve or at least facilitate the transfer.
In this light, it is not uncommon that the transferor, when properly advised, conducts a separation of property and business. This separation can significantly lighten the price as only the business, not the actual real estate, is being transferred. This decrease in price serves as a benefit to the searching buyer, and also gives the transferor the advantage of retaining ownership of real estate.
To encourage the transfer, the transferor often conducts a legal separation of the company, dividing it into smaller individual functioning companies, in order to sell only a part of the original enterprise. The significant advantage of this operation is that it allows a plurality of buyers, and that it allows a transferor to keep a part of his/ her business.
Each of the preliminary operations involved in the transfer of a company call for the assistance of well informed advisors. A lawyer who practices business law will provide a great level of knowledge focused on optimizing the value of your business, which in turn will allow you to transfer your business while also respecting your own interests.
