Reference Texts
- General code of the Taxes: notably article 8 (company liable for income tax), article 199 terdiecies-0-B (article 42 of the economic initiative Law), articles 150 O-A-I-3, 151 septies, 201 and 202 (transfer of goodwill and transfers made within a family group and instruction of August 3 2000 BOI (bare property, specific rules for Wealth Tax (ISF)) 4I-2-00), article 885 G
- Code of Trade, notably D.254 (merger), L228-23 and 24 (clause of agreement)
- Civil code, article 1843-4 (determination of the price by expert)
- Tax authority procedures, notably article L (partial contribution of asset, favorable rules) 17 (assessments in the tax audit concerning registration or wealth tax, 210 B
- Yearly finance laws, notably 1992 (law 92-1476 article 39 duodecies of the General Code of the taxes and instruction of September 30 1996 BOI 4B-3-96), 2000 (article 94: correction of the increments in case of guarantee of liability net assets and article 150 D quatuordecies-0 of the CGI and instruction of June 13 2001 BOI 5C-1-01)
- International accounting standard IFRS, relative (International Financial Reporting Standards) re the obligation to revalue assets
- Charter of Real estate Assessment.
Why an independent assessment?
In valuing the total or partial transfer of a company, the assessments are very often realised by intermediairies, taking part in the future sale, and invoiced as fixed costs ("retainer") of the global sale mandate.
An appraisal of a company by an independent appraiser enables :
- the company to have a complete file of presentation and assessment of the enterprise to hand and to be at total liberty in the choice of the future intermediary for the sale
- to negotiate reduced fees from the future intermediary for the sale
When is the appraisal of a company necessary?
Every time that the shareholders of the company evolve :
- future sale on owner's retirement
- increase of capital, transfer of shares,
- merger or linking (including cross holdings) between two companies (calculation of the exchange parity)
- LMBO / RES (acquisition of the company by the salaried employees)
- information of the salaried employees and the works committee of the company at the time of merger or acquisition
- introduction on stock exchange
but also each time that one of the shareholders must value his personal wealth.
It occurs notably in the following situations :
- inheritance,
- gifts,
- valuation of the company for wealth tax (ISF) (1st declaration or justification of a modification of the value declared for non-exempt personal assets).
Method
The evaluation of the value of a company consists in determining the price at which a transaction would conclude under normal conditions of market.
The assessment of the value of a company is based on the use of different methods of calculation and the comparison with data bases of real transactions. But the approach is not only that of an accountant: it also takes into account, as a purchaser will, the corrections of the value based upon a diagnosis of the strong points and those needing improvement in the company :
- commercial positioning, competition,
- industrial, human (executives and team), legal context,
- contracts and commitments,
- projected evolution of company and marketplace.
Lamy S.A. produces complete appraisal files / company valuations by using the cross fertilisation of expertise through multidisciplinary teams (finance, management, technical, service.).
In France, about 50.000 enterprises change hands every year.
But the number of transfers of companies should increase considerably in the coming years as the generation of the business manager baby-boomers (born between 1944 and 1954) gets ready for retirement.
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