Transferring a business: social and tax issues

The transfer of a company raises many issues, for the future of the transferor and the structure itself. It is advisable to ask the questions both social and fiscal, the answers to which totally influence the transaction.

The issues surrounding the transfer of a business

For the various parties involved, the transfer of a business raises specific issues. The seller seeks to optimize tax issues. The buyer, on the other hand, is attached to the purchase price and to the social issues related to the transfer.

The social stakes of the business transfer

They tend to be put aside. However, the consequences of the business transfer on the human aspect are important. It is useful to identify them from the very first exchanges. Let’s mention, in no particular order, the following:

1. the existence or not of a collective agreement
2. the collective status of employees
3. the possible adaptation of the social regime, in case the employees of the transferred company have to be integrated into the existing teams of the buyer
4. work organization methods
5. the modalities of knowledge transmission, the rare skills of workers, etc.

Read also: Transfer of a company, a challenge for competitiveness

The transfer is an opportunity to carry out a social audit. It will look at all these issues. It allows to evaluate the exchanges to be planned with the employees, the staff representative institutions, the pension and provident organizations and others.

Tax issues

During the transfer of a company, the seller seeks to optimize the capital gains tax. This is calculated differently, depending on the tax system:

1. corporate tax
2. income tax

and the nature of the goods sold :

1. business assets
2. company’s securities

All these issues determine the cost of the transfer and the final sale price of the company. The transferor will therefore be particularly careful to calculate the net amount, after taxes, after deductions and after deduction of the shares in guarantee. This is why we repeat that the preparation before the transfer of a company is essential. Ideally, it should even be anticipated 3 to 5 years in advance, in order to present strong arguments to a buyer and to enhance the value of the company’s assets. The stakes are getting higher with the grandfather boom is currently on. However, today, only half of the companies likely to be transferred are actually transferred.

Read also: entrepreneurs do not prepare their transmission

If you too are wondering about the future of your company?

Call on Actoria consultants, experts in business transfer for more than 25 years.