Developing the legal framework for the takeover of a company

Unlike the fund's takeover, the takeover of social securities involves both asset and liability recovery.

• Asset Recovery : it corresponds to all the rights and assets owned by the company.
  You can see fixed assets intended to serve the company in a sustainable manner (customers, right to leasesecurities, securities, furniture, equipment) and current assets which can be mobilized in the short term (debts, inventories, treasury).
• Resumption of liabilities : it corresponds to the overall indebtedness of the company towards its members (capital injections, partner's current account advances) and in respect of third parties (loans, supplier debts, tax debts, staff salaries).

The takeover of securities (shares or shares) can be carried out by following one of the following methods.

Direct acquisition of securities

The takeover of a business by the acquisition of all or part of the transferor's securities is the traditional method of taking over small businesses (TPEs, SMEs).

If the sale price is not too high, you can acquire the securities directly by buying them back with your own funds and possibly by means of a personal loan.

The securities will be transferred directly to you as soon as you have paid the price agreed in the act of final assignment.

Trade-in Holding

Whether you are alone or accompanied by partners, you can finance the purchase of the target company's securities by creating a takeover holding.

This legal arrangement generally concerns the takeovers of larger companies which require the mobilization of external financing.

The holding company is borrower necessary for the recovery of securities. You do not incur any personal debt. The maturity of the loan (or financing debt) is settled through the dividends distributed by the business taken over.

The holding company may any legal form (SAS, SARL, EURL, SA, etc.), but the most common form is SAS which is distinguished by its management flexibility.

The takeover holding company makes it easier for you to retain control of the target business in the event of an acquisition of equity by outside investors.

Capital increase

A new partner has the opportunity to integrate a business when it performs a capital increase.

During this operation, you can to acquire the new securities issued by the business by providing:

• cash (cash contribution)
• or property such as a business or real property (contribution in kind).

Fusion-absorption

If you already have a business that you want to grow by integrating one of your competitors or a new add-on business, you can take over a target business by fusion-absorption.

The fusion-absorption operation consists, for the target business, in to pass on all of his assets to your business. The associates of the absorbed (and dissolved) business then become associated with the absorbed business.

Merger-absorption allows you to gain market share, expand your business and achieve economies of scale by expanding your structure.

Rental of securities

The rental of securities allows you to benefit from trial period before confirming your intention to participate in the equity of a business. This allows you to better assess risk.

During the rental, you benefit from a right to dividends and a right to vote for decisions other than amendments to the statutes.

The leasing of securities concerns only :

• The shares in businesses subject to business tax (SI)(businesses subject to income tax (IR) by right or by option cannot rent their shares)
• Shares in unlisted businesses (shares in listed businesses and shares awarded free of charge to the company's managers or employees may not be rented out).

The rental of titles is reserved for natural person taker and must be provided for in the statutes of the target business.

The lease may be accompanied by a call option to enable you to acquire the securities at the end of the contract, we are talking about leasing of securities.

Purpose of the guarantee

When you buy the business securities, you take over the whole of a heritage, i.e all assets and liabilities business.

There is continuity of business and you must keep the commitments of the transferor (the seller).

Thus, the business remains liable for debts previously incurred even if they are not yet known at the time of the takeover (tax adjustment, Urssaf, litigation with an employee...).

The appearance of unknown debts at the time of transfer is a major risk that you must avoid to ensure the company's sustainability.

Thanks to the asset-liability guarantee clause, the transferor guarantees you that all the information provided to you is reliable: company activity, social accounts, customers and suppliers, salary costs, possible participation in other businesses, ongoing disputes, etc.

This warranty clause protects you against:

• The Discovery of a Liability which had not been reported at the time of the transfer (it must be a debt that arose before the take-over and is revealed after the take-over)
• Incorrect valuation of the asset whose value is ultimately lower than agreed.

If any of these assumptions are confirmed after takeover, you can activate the warranty to obtain compensation from the transferor.

References to the guarantee clause

The asset-liability guarantee clause shall contain the following information:

• Warranty Start Date : the date from which the prior or subsequent origin of the debt can be assessed.
• Term of the clause : between 3 years and 5 years.
• Calculation of compensation : percentage of the debt that the transferor undertakes to bear. This percentage may decrease over time.
• Guarantee floor amount : The amount from which the guarantee can be activated.
• Maximum amount of compensation : The maximum amount to which the transferor is committed. He will not be obliged to pay more than that.
• Implementation arrangements : additional information needed to apply the guarantee (justification of the liability, method of sending the claim, etc.).