2019 PANORAMA OF BUSINESS TRANSFERS IN ILE-DE-FRANCE
In Ile-de-France, 103,000 companies with at least one employee are headed by a manager aged 55 or over, who will therefore be concerned by the transfer or sale of his or her company in the medium or long term. If no buyer is found, these companies could disappear. 684,000 employees work for them. During ten years, 68,4000 jobs are potentially threatened to disappear each year if these companies are not taken over. In addition, there are 273,000 companies without employees, also affected by the cessation of their manager’s activity within ten years. In order to enable these companies to continue their activities and preserve their jobs, numerous assistance and networking mechanisms have been created between the owners and potential buyers.
Nearly one out of three companies in the Paris region, including companies with no employees, is run by a manager aged 55 or over. Potentially, 376,000 companies with fewer than 50 employees are or will be concerned in the short or medium term by the problem of changing managers. 27.6% of these companies have one or more employees, with small businesses being the most numerous: 22.6% of them have 1 to 9 employees and 4.7% have 10 to 49 employees. Without a buyer, some 68,400 employees would be threatened by the disappearance of their company each year.
These estimates of the number of businesses to be transferred constitute a maximum. In fact, not all companies whose managers decide to cease operations will be affected by the transfer: some will disappear without looking for a buyer or buyers – this phenomenon is more widespread for companies without employees than for companies with employees; others will be taken over by a family member or an employee.
For medium and large companies (5,390 companies in Ile-de-France with 50 or more employees), the issue of transfer is different. Indeed, it seems unlikely that such businesses will disappear for lack of buyers.
Their CROCIS estimate of the CCI Paris Ile-de-France, see methodology transmissions are therefore generally resolved before or, more rarely, at the time of the manager’s cessation of activity, either by an internal succession or by the arrival of an external business manager, who often has experience as a manager. These companies, when they are in good economic health, are coveted by many takeover candidates.
The cessation of activity of the manager is not the only reason for the transfer of companies, but it is the situation that poses the most difficulties, as the transfer must be done quickly. Indeed, the transfer of a company is a complex and generally long process, which must be prepared well in advance. Thus, the manager must continue to manage and invest in his company. At the same time, he or she must learn the mechanisms of the takeover (letter of intent, due diligence, liability guarantee, etc.), set the appropriate price, organize the transfer from a legal and asset point of view, and find the buyer or buyers. The support of the manager and the buyer is therefore a determining factor in the transfer of a company.
Finally, selling at the right time is a key issue: the ideal time is when conditions are optimal for selling (market conditions, company situation, etc.), even if it means selling in advance. For this reason, the earlier the company is prepared to be put on the market, the higher the chances of making a satisfactory sale. As Branka Berthoumieux (head of the “takeover and transfer” Business Unit at the CCIR Paris Ile-de-France) points out, “It is estimated that it takes between 3 and 5 years to prepare a transfer properly, in order to present legible and reassuring elements to a buyer and thus enhance the value of the company’s assets.
It is commonly accepted that approximately 60% of business transfers take place on the “hidden market” and 40% on the “open market”. The “hidden market” is the one in which sellers and buyers meet without the information that the business is for sale being made public, i.e. family transfers, internal transfers (employee takeovers) and transfers in which the two parties have met through a network or a common contact. It is within this market that the most “beautiful” transactions take place. In the “open market”, information on the transferability of a company is public, most often via opportunity exchanges that bring together sellers and buyers.
Although there are more buyers than sellers overall, several factors explain the need for opportunity exchanges: most buyers are looking for the same company profile: a healthy service company with a high turnover and a niche activity. The reality of the offer is different: these are much more modest structures than those present on the “hidden market” and operating in sectors of activity other than those desired by the buyers. The global economic situation means that sellers are unable to sell their businesses at the desired value: many prefer to continue their activity while waiting for a better economic climate.
Trade is a separate issue:
– there are more businesses to sell than there are potential buyers, – the
motivation for buying a business is not necessarily the business itself, but more often the location of the store.
THE MAJORITY OF THE COMPANIES TO BE TRANSFERRED ARE SERVICE COMPANIES
Breakdown of companies in Ile-de-France with a manager aged 55 or over according to the company’s sector of activity
From a sectoral point of view, the distribution of companies potentially to be transferred in the next 10 years differs somewhat from that of all companies: service companies are more numerous (74.5%) among those to be transferred than for all companies (69.0%). On the other hand, other sectors of activity are under-represented: 15.8% for businesses in the retail sector compared to 16.3% for all businesses, 6.9% for businesses in the construction sector (compared to 10.9%), and finally, the proportion of industrial businesses to be transferred (3.9%) is equivalent to that of the overall fabric (3.8%).
Like the Paris Region economic fabric, in which the majority of companies have no employees (75.8%), the companies whose managers are 55 or older have no employees (72.6%) or few (between 1 and 9 employees for 22.6%). Micro-entrepreneurs are counted among the businesses without employees, as they are, by definition, non-transferable.
There are, however, disparities between sectors of activity: among industrial companies transferable in the short or medium term, 62.8% have no employees; this proportion is much higher for services (75.7%).
In terms of jobs, the challenge of business transfers is therefore proportionally more important for industry than for services. However, in terms of the number of jobs at risk, it is in the services sector that the issue is most important: 74.5% of companies whose managers are aged 55 or over are in the services sector.
Distribution of companies in Ile-de-France whose manager is 55 years old or more according to the number of employees in the company
| 0 employees | 1 to 9 employees |
10 to 49 employees |
Set | |
| Industry | 62,8 % | 26,0 % | 11,1 % | 100 % |
| Construction | 63,4 % | 31,1 % | 5,6 % | 100 % |
| Trade | 63,2 % | 31,1 % | 5,6 % | 100 % |
| Services | 75,7 % | 20,1 % | 4,2 % | 100 % |
| Total | 72,6 % | 22,6 % | 4,7 % | 100 % |
CROCIS estimate of the CCI Paris Ile-de-France, see methodology
There is a correlation between the size of the company and the age of the manager; thus, the higher the number of employees, the higher the proportion of managers aged 55 or over.
As there are also major sectoral disparities, significant differences appear when the variables “sector of activity” and “number of employees” are crossed: 47.5% of industrial companies in the Paris region with between 10 and 49 employees will be transferred in the short or medium term, whereas “only” 17.7% of construction companies with no employees will be transferred.
Share of companies with a manager aged 55 or over, by sector of activity
| 0 employees | 1 to 9 employees | 10 to 49 employees | Total | |
| Industry | 30,7 % | 37,0 % | 47,5 % | 33,5 % |
| Construction | 17,7 % | 25,4 % | 31,1 % | 20,1 % |
| Trade | 28,3 % | 38,5 % | 44,7 % | 31,6 % |
| Services | 33,6 % | 39,4 % | 47,9 % | 35,0 % |
| Total | 30,8 % | 36,7 % | 44,1 % | 32,5 % |
CROCIS estimate of the CCI Paris Ile-de-France, see methodology
68,400 JOBS THREATENED EACH YEAR IN THE ILE-DE-FRANCE REGION
Companies with fewer than 50 employees and headed by a manager aged 55 or older employ some 684,130 people; each year 68,410 jobs are therefore potentially at risk of disappearing if these companies are not taken over. The majority of these employees work in service companies – 445,700, or 65.1% of the jobs concerned -, 132,400 salaried jobs are in the retail sector, 55,200 in companies in the construction sector and finally 50,830 in industrial companies.
Estimated number of jobs affected among companies with less than 50 employees
| 1 to 9 employees | 10 to 49 semployees | Total less than 50 employees | |
| Industry | 14 630 | 36 200 | 50 830 |
| Construction | 26 500 | 28 700 | 55 200 |
| Trade | 59 000 | 73 400 | 132 400 |
| Services | 180 000 | 265 700 | 445 700 |
| Total | 280 130 | 404 000 | 684 130 |
CROCIS estimate of the CCI Paris Ile-de-France, see methodology
