As years go by, more and more managers of French PME’s (Small and Medium Businesses) are concerned with transferring their business. Yet this is major problem for the French economy as it leaves a third of the PME’s dead once their creator’s leave for retirement. What can a boss of a PME near the age of retirement do to transfer his or her company to another, while still receiving regular and comfortable revenue?
First one must optimize the results of a company and legally “straighten up.” By reducing payroll taxes and/or the sales force of the management position, one can immediately and sensibly better their profitability and increase the value of their company.
At the same time, one should “straighten up” the company by revising, for example, the legal structure in a way that enables a fair appraisal of the company.
One should also try to find the ideal buyer, which can be a difficult task for small and medium sized companies today. However, there exists serious and non-confrontational ways to facilitate the link between seller and buyer. Under the control and the advice of a professional negotiator, these types of relations all have the potential to reach an agreement regarding the terms and the price of transfer.
Finally, once the agreement is finished, one should legally surround the operation as subtly as possible with asset and liability guarantees and the drafting of acts which provide, in writing, all of the phases of operation up until pre-closing or closing. At the same time, it is also smart to consider the transferring money to one’s children while limiting inheritance tax, an operation that can offer another advantage by sensibly reducing the price of the capital gains tax.
Knowing that one must pay 26% on capital gains starting from the first euro earned drives many business creators to “leave their keys under the doormat” and go, without looking for a definite successor. One should attempt to avoid this choice as even the state would likely be little help in this situation.
If a company continues to live, grow, and develop, is it not profitable in all regards?
And you, a business executive at a crossroads of your professional life: why not take over a company? Again, the public authorities are aware of the issue and attempt to join the forces of different ministries to inspire the French to undertake such endeavors.
When buying an existing company, it will always play to your advantage to avoid any obstacles by following a well-crafted plan. Question how many years it will take to finalize the sale, organize and follow its structure, and make it successful; years during which you could have immediately capitalized or developed your company.
Then take time to reflect upon this. There are many people available to help you, however you choose to proceed.
