Selling a business in France is less formal than in Germany or Spain — no notary is needed to transfer shares — but it carries obligations that exist almost nowhere else. Employees in smaller companies have a legal right to be told before the sale, the tax on the gain depends on choices the owner may never have consciously made, and the company form decides both what the buyer pays in transfer duty and who has to approve the sale.
Much of this changed in 2026. A simplification law adopted this year reshaped the employee information rules, and French merger control thresholds were raised for the first time in more than twenty years. Owners working from advice given a few years ago are working from an out-of-date map.
This article covers the mechanics that shape a French sale, what the 2026 reforms changed, what buyers examine, and what an owner should fix in the twelve months before going to market.
Most French owner-managed businesses are either SARLs or SASs, and the difference matters more at sale than at any other time.
In an SARL, a transfer of shares to a third party requires the approval of the other partners: by default, a majority of the partners holding at least half of the shares, and the articles may impose a stricter rule. The company must be notified of the proposed sale and the partners given the opportunity to decide. For a sole partner this is a formality. For an SARL with a former partner, a family branch or a manager holding a few per cent, it decides whether a sale to an outsider can happen at all.
In an SAS, the rules are whatever the articles say. Approval clauses, pre-emption rights, inalienability periods, drag-along and tag-along provisions are all common, and they were often drafted at incorporation and never read again. Read them before you approach anyone, together with any shareholders' agreement, because a buyer's lawyer will read them on the first day.
The form also decides transfer duty, which the buyer normally pays and prices into the offer. A transfer of SARL shares is taxed at 3 per cent after an allowance of 23,000 euros, applied pro rata to the proportion of shares sold. A transfer of shares in an SAS or SA is taxed at 0.1 per cent with no allowance. On a sale of a few million euros, the difference is significant, and it is one reason buyers and advisers sometimes suggest a conversion before a sale — a step that has to be taken early and for sound reasons, not days before signing.
Unlike in Germany or Spain, the share transfer itself does not need a notary. It is documented in a written agreement and recorded in the company's share register or through the registration formalities for SARL shares. The simplicity is real, but it means the diligence on the chain of title rests entirely on the company's own records.
France is unusual in requiring owners of smaller businesses to inform employees before selling. The rule dates from the 2014 Hamon law and applies where a company with fewer than 250 employees sells its business or where a majority of its shares is sold. Its purpose is to give employees the chance to make an offer; it does not give them a right to buy or to block the sale.
The simplification law of 26 May 2026, applicable to sales concluded from 27 July 2026, changed the regime significantly. In companies with fewer than 50 employees, the information period before the sale falls from two months to one month. In companies with 50 or more employees that have a works council, the separate obligation to inform each employee individually is removed and the works council procedure takes its place. And the maximum civil fine for failing to inform is reduced from 2 per cent to 0.5 per cent of the sale price.
The reform lowers the risk, but it does not remove the obligation, and the timing still has to be built into the process. An owner who wants confidentiality right up to signing needs to plan the information step, decide how it is delivered and how employees can respond, and document that it was done. Buyers ask for that evidence, because a defective procedure remains a claim against the transaction.
Separately, if the deal is structured as a sale of the business rather than the shares, employment contracts transfer automatically to the buyer under the Labour Code, with existing terms and seniority. In a share sale the employer does not change. Either way, expect diligence on employment contracts, the applicable collective agreement, working time, profit-sharing schemes and any pending disputes before the employment tribunals.
For an individual selling shares, the gain is by default subject to the flat tax: 12.8 per cent income tax plus social contributions, now 18.6 per cent, making 31.4 per cent in total. The seller may instead opt for the progressive income tax scale where that is more favourable, and high earners can owe an additional contribution on high incomes on top.
For owners retiring on the sale, the most important relief is the fixed allowance of 500,000 euros under article 150-0 D ter of the Tax Code, which applies to the income tax element of the gain on qualifying sales of SME shares until the end of 2031. The conditions are strict — among them, having run the company and held a significant stake, and retiring within a two-year window around the sale — and the allowance does not reduce social contributions, which remain due on the whole gain. Missing one condition by a few months can cost more than any point negotiated on price.
If the shares are held through a holding company rather than personally, the position changes again: a corporate seller can benefit from a largely exempt regime on qualifying disposals, but the proceeds stay in the holding. Whether that is better depends on what you intend to do with the money, and restructuring shortly before a sale attracts scrutiny.
The practical point is that none of this is fixed at the last minute. The legal form, the holding structure and the retirement timing should be modelled with a tax adviser a year or more before the process starts, because they frequently change what the right deal looks like — including whether a partial sale, a reinvestment or a family transfer produces a better outcome than an outright sale.
France screens foreign investment, and the regime is broad enough that it should be considered for any buyer from outside the European Economic Area.
Authorisation from the Ministry of the Economy is required where a foreign investor takes control of a French company active in a sensitive sector, and, for investors from outside the EEA, where they cross 25 per cent of the voting rights, or 10 per cent for listed companies. Sensitive sectors cover defence and public order, essential infrastructure such as energy, water, transport and public health, and research and development in critical technologies. The filing is mandatory and suspensive, and a transaction completed without the required authorisation is void.
The review runs in two phases: a first decision within 30 business days of a complete filing, and, where a second phase is opened, a further 45 business days. Buyers can also ask in advance whether a target falls within the regime at all.
For a seller, the lesson is to establish early whether the business carries a sensitive activity — sometimes a single customer contract or a product line is enough — because it changes which buyers can realistically complete and when.
Merger control is separate and now bites less often. The 2026 simplification law raised the French notification thresholds for the first time since 2004: from 150 million to 250 million euros of combined worldwide turnover, and from 50 million to 80 million euros of turnover in France for at least two of the parties. Most owner-managed companies fall well below these figures, although the competition authority keeps the ability to look at transactions below the thresholds where there are real competition concerns.
Beyond the financial review, expect concentrated attention on a few areas.
The asset and liability guarantee. French deals rely heavily on the garantie d'actif et de passif, under which the seller compensates the buyer for liabilities arising from the period before completion. Its cap, duration, deductible and security — usually an escrow or a bank guarantee — are among the most negotiated terms in a French transaction, and a seller who has cleaned up known issues negotiates a lighter one.
Tax and social audits. Buyers look at the last tax audit, the years still open, and any contribution or payroll issues. Open years are covered by the guarantee, and the size of the security reflects how many there are.
Commercial leases. Many French businesses operate from premises under a commercial lease, which carries specific rules on assignment, renewal and rent. Whether a change of control or a sale of the business requires landlord consent, and how long the lease has left to run, feed directly into value.
Owner dependence. In a market full of founder-led companies, buyers look hard at whether customers, suppliers and banks deal with the company or with its owner. A second management level that runs the business day to day is worth more in price than almost any single contract.
In the experience of Conclave Partners, the costliest surprise in French diligence is rarely a single hidden liability; it is a series of small, known issues — an unrecorded share transfer, an unsigned lease amendment, an old dispute — that together push the buyer towards a larger guarantee and a bigger escrow.
French trade buyers and family groups remain the most frequent acquirers of owner-managed companies, and they move fastest because they know the labour framework, the lease regime and the market.
Private equity is highly active in the French lower mid-market, often with management participating in the buyout. These buyers pay for a management team that stays and for a business that can absorb acquisitions.
International strategic buyers pay for technology, brands, industrial capacity and market access, and are the most likely to encounter investment screening.
Management buyouts, employee buyouts and family transfers remain common at the smaller end, and are usually the most financing-constrained; vendor loans are frequent in these deals.
Which of these values a particular company highest depends on what is actually being sold — a customer base, a brand, a licence, a team or a location — and Conclave Partners establishes that before any approach, because the employee information step means a French process becomes visible earlier than owners expect and cannot be re-aimed once it is.
Expect a letter of intent with exclusivity, then diligence, then a share purchase agreement accompanied by the asset and liability guarantee.
Expect the guarantee to be secured by an escrow or a first-demand bank guarantee, with its duration often aligned to the tax limitation periods.
Expect a vendor loan or an earn-out where financing is tight or where the business depends on the owner, and a transitional role for the seller.
Expect a non-compete undertaking from the seller, limited in time, territory and scope to be enforceable.
Read the articles and any shareholders' agreement and establish exactly which approvals, pre-emption rights or drag-along provisions apply.
Check the share register and the history of transfers, and regularise anything that was never properly recorded.
Model the tax outcome with an adviser for your actual structure, including the retiring manager allowance and its timing conditions, and decide whether the structure you have is the one you want to sell.
Consider whether the company form is right for the sale, given the difference in transfer duty, and act early if it is not.
Plan the employee information step under the post-2026 rules for your headcount, and decide how it will fit the confidentiality of the process.
Review the commercial lease, its remaining term and its assignment clauses.
Close open tax, social and employment issues rather than carrying them into the guarantee negotiation.
Build a second management level and move key relationships away from you personally. Sellers who ask Conclave Partners where to begin in France are usually pointed at the articles and the tax timing, because the first decides whether you can deliver the company and the second decides how much of the price you keep.
A prepared French company typically takes six to nine months from launch to completion, and longer where investment screening, a complex shareholder base or a lease renegotiation is involved.
The employee information period now sits on the timetable as a fixed step before completion, one month in companies under 50 employees, and the works council procedure in larger ones. It should be scheduled deliberately rather than squeezed in at the end.
Confidentiality needs care. Regional business communities in France are close-knit, and banks, accountants and suppliers are often the first to hear. A staged disclosure plan and a controlled buyer list are worth more than a wide approach.
Timing matters commercially too. France slows markedly in August, and a process whose most delicate moment falls in the summer loses weeks it does not recover. In our experience at Conclave Partners, a launch timed so that the offers arrive in the autumn, with the employee information step planned in advance, regularly saves a full quarter against one that starts in late spring.
No. Unlike in Germany or Spain, a share transfer in an SARL or SAS is documented in a written agreement and recorded in the company's registers or through the applicable registration formalities. What matters instead is approval: an SARL transfer to a third party requires the consent of the other partners, and SAS articles often contain approval or pre-emption clauses.
In most smaller companies, yes. The Hamon law requires prior information of employees when a company with fewer than 250 employees sells its business or a majority of its shares. For sales concluded from 27 July 2026, the period is one month in companies with fewer than 50 employees, companies with a works council follow the works council procedure instead of individual information, and the maximum fine falls from 2 per cent to 0.5 per cent of the price.
For an individual, the default is the flat tax of 31.4 per cent, made up of 12.8 per cent income tax and 18.6 per cent social contributions, with an option for the progressive scale. A retiring manager may qualify for a 500,000 euro allowance on the income tax element until the end of 2031, but not on social contributions, and only if strict conditions are met. Model it a year ahead.
It depends, but transfer duty differs sharply: 3 per cent after a 23,000 euro allowance for SARL shares, against 0.1 per cent for SAS shares. The approval rules also differ. Converting the company form can make sense, but it should be done early and for genuine reasons rather than immediately before a sale.
Sometimes. Foreign investment in sensitive sectors requires prior authorisation where the investor takes control, and for investors from outside the EEA where they cross 25 per cent of the voting rights, or 10 per cent in listed companies. The filing is suspensive, with a 30-business-day first phase and a possible 45-business-day second phase.
Six to nine months from launch to completion for a prepared business, longer with investment screening or shareholder complications. The preparation that determines the price — articles and share register, tax structure and retirement timing, employee information planning, lease review and resolved audit issues — needs about twelve months before that.
Ildar Zakirov — Conclave Partners ildar@conclavepartners.com
Sergi Kosiakof — Conclave Partners sergi@conclavepartners.com