By opting to buy a business, you have the opportunity to immediately start up a craft or industrial activity.
A thorough understanding of the tangible and intangible elements of the business is essential.
A business and its tangible/intangible elements
A business is an intangible asset comprising a combination of tangible and intangible items dedicated to the exercise of a craft or industrial activity.
Intangible assets include customers, trade names, leasehold rights, administrative authorizations, trademarks, patents and licenses, as well as essential contracts such as employment and insurance agreements.
Tangible assets include furniture, tools and vehicles.
Who can buy a business?
Buying a business is not exclusively reserved for large companies.
Individual entrepreneurs, companies and even investors can be candidates.
While this offers an opportunity to enter the market quickly, benefiting from both tangible and intangible assets, it is imperative to consider the financial, legal and operational aspects.
Is it a good idea to buy a business?
There are many reasons why acquiring goodwill for a craft or industrial operation can be a successful strategy.
In addition to benefiting from tangible and intangible assets, there is also the possibility of buying a franchise, which offers the advantage of operating under a secure brand name.
However, it is crucial to negotiate the terms of the franchise carefully, and to understand the associated obligations and costs.
Important steps in buying a business
The purchase of a business for a craft or industrial activity involves several crucial stages, including the search for the future goodwill.
Assessing the value of the business, taking into account its intangible and tangible elements, is a crucial step, and one in which the assistance of a chartered accountant is highly recommended.
This valuation must take into account various factors, such as sales, leasehold rights, rent, competition and location.
The purchase of a business requires a financial audit and an assessment of the company’s commercial, craft or industrial activity.
To make the purchase of a business a reality, it is essential to secure financing.
You can opt for a personal contribution, a bank loan or public grants.
What documents do I need to buy a business?
When acquiring a business for a craft or industrial activity, both the seller and the buyer must comply with specific formalities to finalize the sale.
Obligations of the assignor
Before proceeding with the sale of a business, including its intangible and tangible elements, the seller is required to comply with two crucial reporting obligations.
He must inform the town hall of his intention to sell the business, particularly if the sale is subject to the right of pre-emption.
In addition, for companies with fewer than 250 employees, the seller must notify employees at least two months before finalizing the deed of sale.
Drafting the deed of sale
The sale of a business requires the drafting of a deed of sale, a legal document signed by the seller and the buyer.
This deed must contain information on the sale price of the business, the status of any liens and pledges encumbering the business, the sales figures and results for the last three financial years, the name of the previous vendor and the purchase price, as well as the characteristics of the commercial lease.
At the same time, the seller must provide a document detailing the sales generated between the close of the last financial year and the month prior to the transfer of the business to another industrial operation.
Purchaser’s obligations
Once the deed of sale has been signed, the purchaser is subject to a number of reporting obligations.
The deed of sale must be filed with the local registration office within one month.
In addition, the purchaser must register the deed of sale with the business tax department to determine the applicable registration duties and additional taxes.
A legal announcement must be published in an authorized newspaper within 15 days of closing the sale.
At the same time, the purchaser must register the company on the Guichet Unique des Formalités des Entreprises website.
How do you calculate the purchase of a business?
Registration fees are calculated according to a progressive scale based on the sale price.
Although the purchaser is generally responsible for these fees, the seller may choose to pay them in full or in part.
The progressive scale is as follows:
- No fees up to €23,000,
- 3% for the portion between €23,001 and €200,000,
- 5% over 200,001 euros.
It’s also a good idea to be aware of certain possibilities that can reduce the financial burden of registration fees.
If your business is located in a “zone franche urbaine” or a “zone de revitalisation rurale”, you may be eligible for a reduction in registration fees.
In addition, an allowance of 300,000 euros can be applied under certain conditions, notably for employees who have been with the company for at least two years.
The purchase of a business for a craft or sole proprietorship requires meticulous preparation and a thorough understanding of the financial and operational aspects, including intangible and tangible assets.
Professional advice is recommended to ensure the success of this industrial or craft operation.
