How to Take Over a Business in 2026: Complete Guide

Taking over an existing company rather than creating one appeals every year to thousands of executives changing careers, seasoned entrepreneurs and groups pursuing external growth. The transaction promises turnover already established, a customer base, trained employees and cash in place. It also conceals hidden liabilities, latent disputes and tax structures that turn a good deal into a financial pit. This guide sets out, step by step, how to take over a business while securing each legal phase, from the preliminary audit to signature of the deed, taking account of the rules applicable in 2026.

Purchase of shares or sale of a business (fonds de commerce): two entirely different transactions

The first structuring decision is to choose the object of the purchase. Taking over a business does not mean one single thing legally: one can buy the business as a going concern (fonds de commerce), that is, the operating assets, or buy the shares of the company that holds that business. The legal, tax and employment consequences differ radically.

Taking over the business (fonds de commerce)

Buying a fonds de commerce means acquiring a set of intangible elements (customer base, trading name, leasehold right, licences) and tangible elements (equipment, furniture, goods). The buyer does not buy the legal entity: he or she takes over the activity, not the company that carried it.

The major advantage lies in the isolation of liabilities. In principle, the buyer of a fonds de commerce does not take over the seller's debts, subject to statutory exceptions (joint tax liabilities, employment contracts transferred by operation of law). The content of the deed is no longer imposed by law: Article L141-1 of the French Commercial Code, which required the deed to state the origin of title, the statement of liens and pledges, the turnover and operating results of the last three financial years and the particulars of the commercial lease, was repealed by Act No. 2019-744 of 19 July 2019. In practice, this information is still included in the deed for the buyer's benefit.

On the other hand, the sale of a fonds de commerce does not automatically transfer all contracts. Employment contracts, the commercial lease and insurance contracts follow the activity, but commercial contracts, administrative authorisations or bank loans require the agreement of the counterparties. This is a point often underestimated: a business bought without renegotiating its supplier contracts may lose part of its value from the first month.

Purchase of shares

Acquiring the shares (parts sociales) of a SARL (French private limited company) or the shares (actions) of a SAS (French simplified joint-stock company) amounts to taking control of the legal entity itself, with its assets and all of its liabilities. The buyer inherits everything: known debts, but also unknown debts, future tax reassessments and employment tribunal disputes not yet declared.

This legal continuity has a decisive advantage: no contract is interrupted. Ongoing contracts, operating authorisations, loans and leases continue without renegotiation, since the company remains legally the same. For a business holding approvals that are hard to obtain or strategic framework agreements, a purchase of shares is often the only workable route.

The downside is exposure to hidden liabilities. It is precisely to neutralise this risk that the asset and liability guarantee, detailed below, becomes indispensable in any purchase of shares.

Targeting and auditing: the due diligence phase

No serious takeover is concluded without an acquisition audit, or due diligence. This phase consists of examining the target in depth before committing, in order to validate the price and identify the risks that will justify contractual guarantees. What the legal audit reveals and how to make use of its results are detailed in our article on legal due diligence on the acquisition of a company.

The audits to carry out before signing

The audit is never limited to the accounts. A solid takeover rests on several cross-checks which the buyer, assisted by a lawyer and a chartered accountant, must conduct methodically:

• the accounting and financial audit: the reality of the figures, the quality of the order book, the actual level of cash, doubtful trade receivables, overvalued stock
• the legal audit: up-to-date articles of association, minutes of meetings, ownership of intangible assets, validity of the commercial lease and its permitted-use clause
• the employment audit: employment contracts, applicable collective agreements, unpaid overtime, employment tribunal disputes, pension commitments
• the tax audit: compliance of returns, ongoing inspections, risk of reassessment for financial years not yet time-barred
• the environmental audit, decisive for an industrial activity or a listed site

Each anomaly detected has a dual function. It makes it possible to adjust the price downwards and it feeds into the drafting of the guarantee clauses. An ongoing employment tribunal dispute, for example, will give rise to a specific guarantee covering in full any eventual award.

Taking over a business in difficulty

A takeover may also target a company in collective insolvency proceedings. The sale plan (plan de cession), organised by Articles L642-1 et seq. of the French Commercial Code, makes it possible to buy all or part of a business in administration (redressement) or compulsory liquidation (liquidation judiciaire). The buyer submits an offer to the court-appointed administrator, and the court decides on the basis of the preservation of jobs, payment of creditors and the continuity of the activity. The rules for submitting the offer and the selection criteria applied by the court are set out in our article on the takeover of a business before the court.

This route offers a notable advantage: the buyer chooses the assets and contracts he or she takes over, and does not acquire the prior liabilities. But it takes place under the court's supervision, within tight time limits and in a tense social climate. Taking over a business in difficulty requires reinforced legal preparation and the ability to implement the approved plan quickly.

Assessing the price: valuation methods

The question of price crystallises all the tensions of the negotiation. There is no single objective price: the value of a business results from the combination of several methods and from the balance of bargaining power.

The asset-based method reconstitutes the revalued net assets, that is, the real value of the assets less debts. It suits companies holding property or substantial production equipment, but it ignores future profitability.

The profitability method, by contrast, values the business on its capacity to generate cash flows. A multiple is applied to gross operating surplus or operating profit, a multiple that varies according to the sector, the recurrence of turnover and dependence on the manager. A business whose order book rests on the seller alone is traded at a lower multiple, because the seller's departure puts the customer base at risk.

Article 1843-4 of the French Civil Code, which entrusts the determination of the value of corporate rights to an expert in the event of a dispute, applies only to sales or buy-backs of corporate rights to which the law refers or which the articles of association provide for without the value being determined or determinable. In a negotiated private sale, seller and buyer can refer to an expert only if they agree to entrust the setting of the price to him or her.

Securing the transaction: the essential contractual tools

Once the price is agreed, the legal security of the acquisition rests on a precise contractual architecture. Three documents structure the transaction: the letter of intent, the agreement (or share purchase agreement) and the asset and liability guarantee.

The asset and liability guarantee

The asset and liability guarantee (garantie d'actif et de passif), commonly abbreviated to GAP, is the cornerstone of any purchase of shares. The seller declares a certain number of facts (regularity of the accounts, absence of hidden disputes, tax and employment compliance) and undertakes to compensate the buyer if a liability predating the sale comes to light after the sale, or if a declared asset proves non-existent.

Its drafting follows several parameters negotiated line by line:

• the base: does the guarantee cover any liability or only items not provisioned in the balance sheet?
• the duration: most often aligned with tax and employment limitation periods, generally three years, sometimes longer for environmental matters
• the trigger threshold and the deductible: an amount below which the buyer can claim nothing, to avoid claims of low value
• the cap: the overall limit on compensation, which almost never covers 100% of the price

The guarantee is only worth its counter-guarantee. A GAP signed by a seller who is insolvent the day after the sale has no value. The buyer therefore frequently requires a guarantee of the guarantee: escrow of part of the price, a bank guarantee or a first-demand guarantee, which ensure actual payment if the GAP is called.

The clauses that make the difference

Beyond the GAP, several provisions deserve particular attention. The non-competition clause prohibits the seller from re-establishing a competing activity for a limited period and within a limited geographical area; without it, nothing prevents the seller from rebuilding a customer base right next door. The support clause organises the transition, providing that the seller remains present for a few months to pass on customer relationships and know-how. Finally, the earn-out clause indexes part of the price to future results, which aligns the interests of seller and buyer where the valuation rests on uncertain growth prospects.

The legal obligations to comply with in 2026

Several statutory provisions govern the takeover, and failure to observe them may delay, increase the cost of, or even annul the transaction.

Prior information of employees

Act No. 2014-856 of 31 July 2014, known as the Hamon Act, introduced prior information of employees where the majority shareholding in a company is sold, in order to enable them to submit an offer to take over. In its wording resulting from Act No. 2026-403 of 26 May 2026, applicable to sales concluded at least two months after the promulgation of that Act, Article L23-10-1 of the French Commercial Code requires, in companies that are not required to set up a social and economic committee (comité social et économique) exercising the powers provided for in the second paragraph of Article L. 2312-1 of the French Labour Code, that employees be informed at the latest one month before the sale; the sale may take place earlier if each employee has made known his or her decision not to submit an offer. In companies subject to this obligation, the social and economic committee is informed and consulted (Article L23-10-7).

Breach no longer results in nullity of the sale, which was struck down by the Constitutional Council. Where a liability action is brought, the court may, at the request of the public prosecutor, impose on the seller a civil fine the amount of which may not exceed 0.5% of the amount of the sale. For the buyer, checking that this obligation has been properly performed is among the systematic points of control, because a failure to inform weakens the transaction.

Pre-emption rights and publicity formalities

The sale of a fonds de commerce may run up against the municipality's pre-emption right, provided for by Article L214-1 of the French Urban Planning Code, where the business is located within a protection perimeter for local commerce. The seller must then notify the town hall of the plan, and the town hall has a period in which to come forward as buyer. Ignoring this formality exposes the sale to annulment.

The sale of a business also gives rise to publicity formalities intended to protect the seller's creditors. The sale is published in a legal notices medium and in the BODACC (French official gazette of civil and commercial announcements), which gives creditors a period in which to lodge an opposition. During this period, the sale price is unavailable and generally held in escrow by the person drafting the deed. How this escrow works and how it fits with the asset and liability guarantee are dealt with separately in our article on escrow of the price in the sale of a business.

Taxation of the takeover

The tax regime depends on the object of the purchase. The sale of a fonds de commerce bears registration duties according to the scale in Article 719 of the French General Tax Code: no duty up to a price of €23,000, 3% on the portion between €23,000 and €200,000, and 5% above that. These duties are in principle borne by the buyer.

The sale of shares follows Article 726 of the same Code. The purchase of SARL shares is taxed at 3% after application of an allowance, whereas the sale of shares in a SA or SAS bears a reduced duty of 0.1%. This difference in treatment, which is very favourable to shares, partly explains why many targets are set up as SAS.

The buyer of a business must finally be aware of the joint tax liability in Article 1684 of the French General Tax Code: the buyer may be held jointly liable for payment of the tax on profits made by the seller during the financial year of the sale, for a period of 90 days. This rule justifies holding the price in escrow for as long as it takes for the seller's tax position to be cleared.

Financing the purchase of a business

The financial structure determines the feasibility of the takeover. Few buyers finance the whole amount from their own funds. The most common structure for a purchase of shares consists in setting up a holding company which borrows to acquire the target, then repays the loan with dividends passed up from the acquired company. This leveraged structure, the leveraged buy-out, optimises the buyer's personal contribution while benefiting from the parent-subsidiary regime on dividends.

Bank financing remains central, generally accompanied by security taken over the shares or the assets of the target. Public schemes complete the financing round: Bpifrance offers guarantees and co-financing intended to facilitate business transfers, and support networks such as the chambers of commerce and industry direct buyers towards regional aid. The quality of the business plan and the consistency between the price paid, the repayment capacity and the cash flows generated by the target determine the lender's agreement.

Seven steps to a successful takeover

A well-conducted business takeover in 2026 follows a logical sequence that must not be short-circuited:

• define the project and scope: sector, size, geographical area, business or shares
• identify and approach targets, signing a confidentiality agreement before any exchange of sensitive information
• formalise a letter of intent setting the indicative price and conditions
• conduct the legal, accounting, employment and tax due diligence
• negotiate the agreement and the asset and liability guarantee
• close the financing and satisfy the conditions precedent
• sign the final deed, complete the registration and publicity formalities, then organise the transition

Each step benefits from being supervised by professionals. The drafting of the guarantees, in particular, cannot be improvised: it is what protects the buyer when the hidden liability comes to light, sometimes several years after signing.

Conclusion

Taking over a business is never a mere financial transaction: it is a legal operation in which every clause commits the buyer's future. The choice between a purchase of shares and a sale of a fonds de commerce determines exposure to liabilities; the quality of the due diligence determines the accuracy of the price; the asset and liability guarantee protects against unpleasant surprises; compliance with legal obligations, from informing employees to pre-emption rights, secures the very validity of the sale. The temptation to cut costs by dispensing with an audit or a guarantee is, in the great majority of cases, the worst possible calculation.

Before signing any letter of intent, have the target audited by a lawyer and a chartered accountant, and commit to no payment before negotiating an asset and liability guarantee backed by an effective financial counter-guarantee. It is this discipline, and not optimism about the target's prospects, that distinguishes a successful takeover from post-acquisition litigation.

Frequently asked questions

Is it better to buy the business or the shares of the company?

It all depends on the liabilities and the contracts. Buying the business insulates the buyer from prior debts, but requires renegotiation of the commercial and banking contracts, which do not transfer automatically. Buying the shares ensures complete continuity of contracts and authorisations, but transfers all of the liabilities, including hidden ones. For a business holding approvals or strategic contracts, a purchase of shares is often necessary, provided it is accompanied by a solid asset and liability guarantee.

What is an asset and liability guarantee and is it mandatory?

The asset and liability guarantee (GAP) is a contractual clause by which the seller undertakes to compensate the buyer if a liability predating the sale appears after the sale or if a declared asset proves non-existent. It is not imposed by law, but it is indispensable in any purchase of shares to neutralise the risk of hidden liabilities. Without a financial counter-guarantee, such as escrow or a bank guarantee, it loses most of its effectiveness.

Must employees be informed before the business is sold?

Yes, in companies that are not required to set up a social and economic committee exercising the economic powers provided for by the Labour Code. Article L23-10-1 of the French Commercial Code, resulting from the Hamon Act of 31 July 2014 and amended by Act No. 2026-403 of 26 May 2026, requires employees to be informed at the latest one month before the sale of the majority shareholding, so that they can submit an offer to take over. In companies with such a committee, the committee is informed and consulted. Breach does not annul the sale, but exposes the seller, if a liability action is brought, to a civil fine of up to 0.5% of the amount of the sale.

What are the registration duties on a business takeover?

For a sale of a fonds de commerce, Article 719 of the French General Tax Code provides for 0% up to €23,000, 3% between €23,000 and €200,000, and 5% above that. For a sale of shares, Article 726 applies 3% after allowance on SARL shares, as against only 0.1% on shares in a SA or SAS. This difference makes the acquisition of shares more advantageous for tax purposes.

How long does a business takeover take?

A completed transaction generally spreads over several months, from identification of the target to signature of the final deed. The due diligence and the negotiation of the guarantees are the longest phases, to which are added the legal time limits that cannot be shortened: one month for informing employees in the companies concerned, the creditors' opposition period in the case of a sale of a business, and the time needed to obtain bank financing.

Can a business in compulsory liquidation be taken over?

Yes, through the sale plan provided for in Articles L642-1 et seq. of the French Commercial Code. The buyer submits an offer to the court-appointed administrator, and the court decides taking into account the preservation of jobs and the continuity of the activity. The advantage is being able to choose the assets and contracts taken over without assuming the prior liabilities, at the price of a supervised procedure and tight time limits.

Which professionals should be consulted to take over a business?

A takeover calls on several complementary skills. The lawyer secures the legal structure, drafts the agreement and negotiates the asset and liability guarantee; the chartered accountant conducts the financial audit and validates the valuation; the notary acts if the transaction includes property assets. Surrounding oneself with advisers from the audit phase, before signing any letter of intent, remains the best way to avoid post-acquisition litigation.