Business sale lawyer in Paris: valuation, escrow and warranties.

A business is a composite operating asset. It comprises intangible elements (customers, goodwill, shop sign, trade name, intellectual property rights, licences) and tangible elements (equipment, furniture, stock). It includes neither real estate, nor the seller's receivables, nor its debts, unless the deed expressly provides otherwise. This definition guides the valuation, the exact scope transferred and the applicable registration duties.

Article L. 141-2 of the Commercial Code requires disclosure of monthly turnover between the close of the last financial year and the month preceding the sale. The seller must make available to the buyer, for three years, the accounting books for the three financial years preceding the sale. Any contrary clause is deemed unwritten. The deed also customarily includes the description of the assets sold, the price with its breakdown, the payment terms, the warranties given and the date on which the buyer takes possession.

The escrow holds the sale price with a trusted third party (often the drafting lawyer or notary) for three to six months. It protects the buyer from double payment and guarantees the seller's creditors that any opposition they lodge will be effective. The escrow agent releases the price in instalments: a first release after the ten-day opposition period expires, a second after the tax clearance, and the balance after the warranty and indemnity agreement expires.

The statutory opposition period is ten days from the latest of the publications required by Article L. 141-12 of the Commercial Code, that is, publication in the department's legal notices medium and in the BODACC. On pain of nullity, the opposition must state the amount and the grounds of the claim and include an address for service within the jurisdiction where the business is located. Any payment made to the seller before this period expires cannot be relied on against the creditors.

The buyer publishes the notice of sale within fifteen days of signing, in a medium authorised to receive legal notices in the department of operation and then in the Official Bulletin of Civil and Commercial Notices (BODACC). The notice states the names of the parties, the description of the business, the price, the address for service for oppositions and the name of the escrow agent. Incomplete publication, or no publication, deprives the buyer of discharge as against third parties.

This question mainly concerns the audit of the commercial lease, covered in detail on the page on the sale of a business seen from the lease angle. From the corporate angle, note that Article L. 145-16 of the Commercial Code deems unwritten any agreement prohibiting the assignment of the lease to the buyer of the business. The landlord may, however, make the assignment subject to prior approval or to specific procedural obligations.

Yes, automatically. Article L. 1224-1 of the Labour Code provides that all employment contracts in force on the day of the sale continue between the new employer and the staff of the business. The buyer takes over the acquired rights (seniority, collectively agreed bonuses, accrued leave days) as well as pending employment tribunal disputes. Precise mapping of the workforce and review of ongoing unfitness cases are essential steps of the audit.

Registration duties are in principle payable by the buyer. The total results from the duty provided for by Article 719 of the General Tax Code, to which the departmental and communal taxes are added: 0% up to €23,000, 3% from €23,000 to €200,000 and 5% above. For a sale at €480,000, it comes to €19,310, excluding the minimum charge and special regimes. A contrary agreement may share the burden between the parties.

Under Article 1684 of the General Tax Code, the buyer is jointly liable with the seller for payment of the income tax and corporate income tax relating to the profits made up to the day of the sale. This joint liability lasts ninety days from the filing of the Article 201 CGI return, reduced to thirty days if the seller meets several formal conditions. A protective escrow calibrated to this period effectively protects the buyer.

Yes, in all business transfer transactions. The warranty and indemnity agreement protects the buyer against liabilities predating the sale that surface after closing: tax reassessments, employment disputes, undisclosed commercial disputes, latent defects in the equipment. It has a dedicated page on the warranty and indemnity methodology, which is the preceding step of the M&A journey.

If the opposition is formally regular and the claim is certain, the escrow agent keeps the price until the opposing debt is paid. If the claim is manifestly not certain, not quantified or not due, the seller may apply to the urgent applications judge under Article L. 141-15 of the Commercial Code to have the opposition lifted and receive the price despite the opposition. The judge may make the lifting conditional on depositing a sum sufficient to secure the disputed claim.

Yes. In its judgment of 18 September 2024 No. 23-10.183, the Court of Cassation, commercial chamber, reaffirmed that the seller's fraudulent concealment always makes excusable the error induced in the buyer. The buyer's lack of diligence can no longer be used to dismiss a fraud claim. The buyer may choose between an action for nullity with full refund of the price and an action for a price reduction with the sale maintained.

An interim manager is a senior executive appointed temporarily to ensure operational continuity between signing and the buyer's actual start in the role. This is useful when the seller is no longer immediately available after closing, when the buyer needs a learning period, or when a regulated activity requires a licence holder to remain in place. The interim management contract is negotiated in the agreement, with a precise mandate and a budget envelope.

For a standard SME sale between €200,000 and €800,000 (audit, agreement, warranty and indemnity, closing follow-up, clearing of oppositions), fees are generally between €6,000 and €12,000 incl. VAT. For complex transactions (LBO, acquiring holding company, cross-warranties, latent post-closing disputes), the range rises to €15,000 - €30,000 incl. VAT. The firm systematically proposes an overall fixed fee after reviewing the file, with no surprise hourly billing.

Disputes between traders relating to a deed of sale of a business fall within the commercial court of the defendant's registered office or of the place where the business operates. For a Paris sale, the Paris commercial court has jurisdiction in principle. Actions between a consumer and a trader fall within the judicial court. An arbitration clause may also derogate from these rules. The firm regularly pleads before the Paris commercial court.