The firm advises sellers and buyers on sales and acquisitions of company shares (in French) and of businesses as going concerns (fonds de commerce), on LBO, OBO and MBO transactions, on management buy-outs and on family successions.
It acts for small and medium-sized enterprises and mid-market companies, alone or alongside a corporate finance adviser, an accountant or a notary.
Experience gained on major LBO transactions is applied to mid-sized deals (valuations of €0 to €10m) with the same documentary rigour, and a working method suited to their pace and their budget.
The letter of intent is the moment when the essentials are settled: the price and its adjustment mechanisms, the perimeter, exclusivity, the due diligence timetable and the conditions precedent. An imprecise letter of intent is paid for in the sale and purchase agreement, once the balance of power has shifted.
The firm drafts or reviews the letter of intent, securing the points that govern what follows: whether each provision is binding or not, the length of exclusivity, the treatment of costs if negotiations break down, and the interaction with the financing.
A letter of intent that is too precise ceases to be a letter of intent. A sale is complete between the parties, and ownership passes as of right to the buyer as against the seller, as soon as they have agreed on the thing and the price, even though the thing has not yet been delivered nor the price paid (article 1583 of the French Civil Code). A document that identifies the shares and fixes a firm price, without expressly reserving the signature of a sale and purchase agreement, exposes its signatory to the argument that a sale has already been formed.
Due diligence is not there to list everything, but to rank. Each point identified is graded by impact and by likelihood, then tied to a concrete consequence: a price adjustment, a specific indemnity, a condition precedent, or simply a point to watch after closing.
The due diligence report is written to be read by a company director, with a summary framed for decision-making.
Three families of points recur: what blocks the transaction, what changes its price, and what is dealt with by a representation from the seller backed by an indemnity. Sorting between these three categories is the very purpose of due diligence, and it is done with the buyer, never in the buyer's place.
The sale and purchase agreement fixes the price and its adjustments (deferred consideration, earn-out, vendor loan), the conditions precedent, the parties' undertakings up to closing and the terms of completion. It is the reference document for the transaction, the one the parties return to when they disagree.
Each clause is drafted to hold up in litigation. The sensitive negotiation points are identified and settled before the documentation is finalised.
The price of a sale must be determined and specified by the parties (article 1591 of the French Civil Code). It may however be left to the valuation of a third party; if that third party will not or cannot make the valuation, there is no sale, unless another third party makes it (article 1592 of the French Civil Code).
This second rule applies whenever the parties entrust the valuation of the price, or of one component of the price, to a third party, which is frequent in adjustment clauses and in deferred consideration mechanisms.
The exception then counts for as much as the rule: the text allows valuation by another third party, without saying how that party is appointed. A clause that names an expert without providing for their replacement, or fixing the method they are to apply, leaves the parties facing deadlock and a dispute over price at the very moment when they no longer agree. It is drafted by naming the third party, by providing for a replacement appointment and by fixing the accounting standard on which that party is to rule.
The warranty and indemnity agreement (garantie d'actif et de passif) extends the sale and purchase agreement: the seller's representations about the company, the cap and the deductible, a duration aligned with the tax and social security reassessment periods, the claims procedure and the security for the warranty itself (a price retention held in escrow, or a bank guarantee).
The firm negotiates it on the seller side, to limit exposure in duration and in amount, and on the buyer side, so that it genuinely covers the risks identified in due diligence.
A warranty is worth no more than the party who gave it is worth on the day it is called, which is often several years after that party has banked the price. That is why negotiating the cap matters less than negotiating the security that backs it.
The firm prepares and coordinates the closing: satisfaction of the conditions precedent, escrow of the price on a CARPA account, the regulated client account operated by the French Bar, the completion deed, share transfer forms, registers, minutes and filings with the commercial court registry.
It then remains alongside its client for any claim under the warranty, the monitoring of deferred consideration and the legal integration of the target.
Between three and six months in practice, from signature of the letter of intent to closing: three to six weeks of due diligence, one to two months negotiating the sale and purchase agreement and the warranty, then the time needed to satisfy the conditions precedent, including obtaining the banking finance, which rarely takes less than six weeks.
A share sale transfers the company with all of its liabilities, known and unknown, which makes the warranty and indemnity agreement indispensable. A sale of the fonds de commerce, the business as a going concern, transfers only the designated operating assets, under a regime of its own: statutory publication, creditors' opposition within ten days of the last publication (article L. 141-14 of the French Commercial Code), joint tax liability of the buyer (article 1684 of the French General Tax Code) and escrow of the price during those periods. Employment contracts, by contrast, transfer automatically in both cases, under article L. 1224-1 of the French Labour Code. The liabilities attached to the fonds de commerce are cleared once the creditors' opposition period has run its course.
It is the seller's undertaking to indemnify the buyer for any liability, or any reduction in assets, originating before the sale and revealed after it. Its usual term is three years, aligned with the tax and social security reassessment periods, with a cap often between 10% and 30% of the sale price, and a deductible.
Yes, the roles are distinct. The intermediary finds the counterparty and negotiates the price, the accountant produces the figures, the lawyer drafts and secures the documents that bind the parties for years. Neither of the first two is authorised to draft the sale and purchase agreement and the warranty, nor does either bear responsibility for their performance.
Both. The firm is frequently instructed by the buyer on SME acquisitions, and by the seller on family successions or on sales to a fund.
Before the letter of intent, not after. That is the stage at which the price and its adjustment mechanisms, the perimeter, the length of exclusivity and the timetable are fixed. Everything conceded in the letter of intent is then renegotiated from a weaker position, once the buyer has incurred due diligence costs and the seller has turned away the other candidates.
A director who decides to sell and signs a letter of intent in the same month gives up the one phase in which the balance of power is in their favour.
That is the function of the warranty and indemnity agreement. Three conditions must still be met: the triggering event must predate the sale, the claim must be made within the agreed warranty period, and the amount must exceed the trigger threshold and the deductible.
A badly drafted warranty proves inoperative at the very moment it should bite: a notification period that is too short, a notice obligation poorly discharged by the buyer, a cap exhausted by minor claims. The decisive question is not whether the warranty exists, but what secures it: a price retention held in escrow, or a bank guarantee. A promise to pay from a seller who has become insolvent is worth nothing.
Yes, through three distinct mechanisms that should not be confused. The price adjustment corrects the agreed price by reference to the accounts drawn up as at the closing date, on net cash and working capital. Deferred consideration, or earn-out, makes a fraction of the price conditional on future results. A claim under the warranty, finally, does not change the price but gives rise to indemnification.
Each calls for its own drafting: calculation method, accounting framework, period for challenge, expert appointed in case of disagreement. An earn-out whose criteria depend on decisions taken by the buyer after closing is a predictable source of litigation.
The points company directors bring to us most often, treated in depth, with the sources.
