To start up a business, several elements are required.
Goodwill plays a crucial role, acting as a commercial catalyst, enabling the buyer to bypass the creation phase and concentrate directly on management.
The buyer recovers all the tangible and intangible elements essential to an economic or commercial activity.
What is goodwill?
Goodwill is a set of assets that varies according to the nature of the commercial or industrial activity.
In purchasing it, the new owner recovers all vehicles, specific installations, machinery, tools, equipment and furniture.
Inventories, merchandise and other physical assets with a lifespan of more than one year can also be added.
They are subject to negotiation.
It is important to note that this excludes real estate where the entity is located, as well as the seller’s receivables.
In addition to tangible assets, intangible assets are also included in the sale. So what is goodwill?
It ranges from the business name, to licenses and administrative authorizations.
Intellectual property rights, online presence and marketing, patents or trademarks, but also customer base or leasehold rights will all be transferred to the buyer.
Insurance policies and employment contracts form part of the goodwill and are essential to the smooth running of the business.
Receivables and debts are not.
When selling the business of a hairdressing salon, the purchaser will be able to recover all the tangible and intangible assets, from the sign and the usual clientele, to the chairs, mirrors and other equipment required to run the business.
Who can become a business owner?
Individuals with the necessary funds and a notion of how to manage or take over a commercial activity can buy a business.
However, before taking the plunge, it’s essential to find out exactly what a business is, since there are a number of rules governing this procedure.
A notary, a chartered accountant or a legal professional can help you understand the tangible and intangible elements involved, and how to exploit them.
Finding the right financing is essential to build up the funds for such an acquisition, but identifying an entity with economic potential and added value is also a major point that requires in-depth study.
What is a profitable business and how do you find it?
A number of specialized sites and companies simplify the search, helping buyers to analyze various criteria such as the nature of the business, the selling price in relation to the available budget and various future costs, and the location.
Projection and risk assessment are essential for a sustainable business.
To determine what constitutes a viable business, you also need to carry out an economic analysis.
Existing expenses, overall surface area, footfall, accessibility and the presence of nearby competition will all play a role in favor or against the sale of the business.
The reasons for the sale are also a factor in negotiation, since in addition to retirement and a change of activity, liquidation by court order is often a decisive factor.
Tips for a successful acquisition
What is an attractive business if not a price that is consistent with the market?
While one of the best methods is to calculateEBITDA (Earnings Before Interest, Tax, Depreciation and Amortization), which deducts personnel costs, external charges and purchases from overall sales, it is also possible to use the seller’s sales excluding VAT.
The price of a business sale can fluctuate due to variations such as rent.
In addition, stock takeover is a factor in price breakdown.
Franchise and distribution agreements with local producers or service providers are essential points for taking over the business.
It’s in the buyer’s interest to ask what goodwill is and what it encompasses, so as to recover the economic benefits in addition to the tangible and intangible aspects.
All the clauses of the contract must be reviewed and negotiated, if necessary, to find the best agreement between the seller and the buyer.
Administrative formalities and obligations
First and foremost, the seller must inform the Town Hall of the sale of the business.
A form must be submitted if the business is subject to the right of pre-emption.
Employees must be informed two months before the deed of sale is drawn up, as they have priority for the purchase of the business.
This stage is compulsory and only applies to companies with fewer than 250 employees.
The document must be signed by both parties and include :
- The price
- Previous seller’s name
- Sales and results in recent years
- Statement of liens and pledges on the business
- The date, name and address of the lessor and assignor, as well as the characteristics of the assignor
The purchaser must :
- Register the deed with the tax authorities
- Register the company with the Registre du Commerce et des Sociétés
- Publish the acquisition in a legal gazette within 15 days of the sale.
- An official notice must appear in the Bulletin Officiel des Annonces Civiles et Commerciales.
Why buy a business?
The main advantage of a buyout lies in the possibility of transferring a clientele affiliated to the brand and accustomed to the location, ensuring that the buyer can generate an initial profit.
This guarantees immediate start-up without the need to apply for new authorizations, patents and other licenses.
It is also possible to recover all the recognition and awards obtained by the establishment prior to the acquisition.
For those wondering what a fonds de commerce is, it’s an effective and reliable way of getting started in entrepreneurship, since the purchaser is also protected and won’t have to answer for the transferor’s activities.
