The process of acquiring and selling real estate in France is often viewed as complex and time-consuming, with varying factors at each stage. Buyers and sellers usually have different goals and seek to reduce their respective risks and liabilities.

This guide explores two key types of business acquisition contracts in France: asset purchases and share acquisitions. It provides crucial insights into the distinctions between these two approaches.

What are the Main Corporate Entities for Private Acquisitions?

The following corporate structures are commonly used for private business acquisitions in France:

• Simplified Joint Stock Companies (SAS) and Joint-Stock Companies (SA): Both allow acquisitions by foreign buyers, except where restrictions are imposed in the company’s articles of association or shareholder agreements.
• Private Limited Liability Companies (SARL): In this structure, transfers to third parties require approval from shareholders holding at least 50% of the company’s share capital.

How Can a Private Company Be Acquired?

The legal and tax implications of acquiring a business in France differ significantly based on whether the transaction is structured as a share purchase or an asset acquisition.

Key Features of a Share Sale

A private company can be acquired through the purchase of shares. In a share sale, the buyer acquires not only the company’s assets but also its liabilities, unless specific exclusions are agreed upon. Due diligence is critical to identify the warranties and obligations for both the buyer and seller. By acquiring shares, the buyer takes ownership of the entire company, including its contracts, liabilities, and assets.

Key Features of an Asset Sale

Alternatively, a private company can be acquired through an asset sale, which allows the buyer to avoid taking on unwanted liabilities. In an asset sale, only specific assets and liabilities—outlined in the purchase agreement—are transferred. For example, employment contracts may automatically transfer, but other liabilities typically do not, unless specified.

The agreement will explicitly list the assets involved and their corresponding prices, creating what is legally recognized as a « Fonds de commerce » (business goodwill). An asset sale is subject to transfer taxes and must comply with specific formalities, including a French-language business transfer agreement denominated in euros.

Legal Formalities for an Asset Sale

Within 15 days of the sale, a notice of the transaction must be published in the BODACC (French Official Bulletin of Civil and Commercial Announcements) and in a local legal journal. The consent of suppliers and other contractual partners must be obtained beforehand. Moreover, creditors of the seller have a 10-day period to object to the sale.

Additionally, if the business is located in a designated protected area, the local municipality has a right of preemption. This allows the municipality to acquire the business, and a notification must be sent to them before the sale, granting them a two-month window to decide whether to exercise this right. Failing to provide this notification can render the transfer invalid in court.

Unless an explicit written agreement states otherwise, the seller remains jointly liable to third parties involved in existing contracts.

Conclusion

Understanding the common deal structures and their legal implications is vital before proceeding with a business acquisition in France. With a clear understanding of the options—whether a share or asset sale—you can move forward confidently. At enterfrance, our professionals are here to ensure you take the correct steps without complications, providing you with expert support throughout the process.