Business Acquisition and Sale Lawyer in Paris

Short answer. Starting, conducting and breaking off negotiations are free, subject to good faith, and damages for a wrongful break-off never cover the benefits expected from the contract that was not concluded (Article 1112 of the Civil Code). A party that knows information decisive for the other’s consent must disclose it (Article 1112-1), and confidential information obtained during negotiations may be neither used nor disclosed (Article 1112-2). A letter of intent showing final agreement on the shares sold and the price may amount to a binding sale (Article 1583); a reservation for definitive documentation and due diligence removes that risk. Fraud and mistake as to essential qualities ground an action for nullity or price reduction (Articles 1130 et seq.), time-barred five years after the buyer knew or should have known the facts (Articles 1144 and 2224). A warranty of assets and liabilities has no statutory term: it is negotiated, three years in practice for general warranties, and the tax and social security limitation periods for those liabilities.

A company sale is rarely decided on signing day. It is decided in the due diligence that precedes it, in the drafting of the seller’s representations and in the mechanics of the warranty that will apply for three to five years. The firm acts on acquisitions and disposals of French SMEs and mid-sized companies, in France and in a cross-border context, for the seller or for the buyer.

The objective is simple: the price paid should match what is bought, and the warranty should be enforceable if it does not.

The risk: paying for a liability you did not see, or warranting what you did not disclose

For the buyer, the risk lies in the gap between the company described in the documentation and the real company: a pending tax or social security audit, a key customer contract terminable at the first alert, a latent employment claim, a change of control clause in a lease or a loan. Without targeted due diligence and precise seller representations, these liabilities remain with the buyer.

For the seller, the risk is symmetrical: a warranty with no cap, no basket and no time limit exposes him for years to claims on facts he did not control. Article 1112-1 of the French Civil Code also imposes a pre-contractual duty of information whose breach may found an action for nullity or damages, independently of the contractual warranty.

The legal solution: documentation that allocates risks before they materialise

The security of the transaction rests on three documents. The letter of intent fixes the scope, the price and exclusivity, and states what is binding and what is not. The sale agreement organises the transfer, the conditions precedent and the price adjustments. The warranty and indemnity agreement describes the company at closing and determines who bears the differences: cap, basket, duration, claims procedure and security for the warranty.

In a post-closing dispute, several grounds combine: enforcement of the contractual warranty, fraud or mistake as to essential qualities (Articles 1130 et seq. of the Civil Code), breach of the duty of information. The choice depends on time limits, available evidence and the remedy sought, price reduction or rescission.

How the firm assists you

Before closing, the firm conducts or coordinates the legal due diligence, drafts or reviews the letter of intent and the sale agreement, and negotiates the warranty according to its client’s position. It works alongside the accountants and, where the target or the buyer is located abroad, with foreign counsel.

After closing, it notifies or contests warranty claims, negotiates their settlement and, if necessary, brings the matter before the economic activities court (tribunal des activités économiques) or the arbitral tribunal provided for in the agreement. Questions of nullity of corporate decisions taken in connection with the transaction are handled in light of the reform of nullities resulting from the ordonnance of 12 March 2025.

Letter of intent, exclusivity, confidentiality: what binds before signing

Freedom to break off negotiations is the rule (Article 1112 of the Civil Code), provided good faith is respected. Even where the breaking off is wrongful, compensation is limited: the loss recoverable can cover neither the benefits expected from the contract that was not concluded nor the loss of the chance of obtaining them. A seller abandoned after four months of due diligence recovers his costs, not the price he hoped for.

Hence the importance of what is put in writing before the agreement. The exclusivity clause in the letter of intent creates a contractual obligation, whose breach can be quantified if the clause provides for an indemnity. The confidentiality undertaking supplements Article 1112-2 of the Civil Code, which already makes liable anyone who uses or discloses without authorisation confidential information obtained during negotiations; a target’s data room contains precisely this kind of information.

There remains the trap of the overly precise letter of intent. Where it settles the shares sold and the price without sufficient reservation, it may amount to a completed sale (Article 1583). A formula such as “subject to definitive documentation and due diligence” is not a stylistic precaution.

Typical matters

The situations below are illustrative scenarios drawn from the firm’s practice and anonymised.

Tax liability revealed six months after closing

The buyer of a services company receives a tax reassessment covering pre-closing years. The firm notifies the claim within the contractual deadline, documents the loss and obtains coverage of the reassessment under the warranty.

Earn-out refused by the buyer

A seller disputes the earn-out calculation based on first-year EBITDA after the buyer changed the scope of the business. The firm obtains the appointment of an independent expert under the contractual procedure and payment of the balance.

Foreign group acquiring a French target

A European buyer acquires a French industrial SME. The firm adapts the documentation to French law requirements, confirms that no foreign investment screening applies and secures the warranty with an escrow.

Two matters are inseparable from an acquisition. The relationship between the buyer and any remaining partners, which is where shareholder disputes begin, and the premises, since the transfer of the business usually carries the transfer of the commercial lease with it.

On the clause that protects the buyer after closing, see our article Warranty of assets and liabilities: duration, cap and how to make a claim.

Where the sale is the outcome of a dispute, see our article on how to break a 50/50 shareholder deadlock.

The real timetable of a sale, from publication to release of the price, is set out in our article on selling a business (fonds de commerce): creditors’ objections, escrow of the price and actual time limits.

Frequently Asked Questions

Share deal or asset deal?

A share purchase transfers the company with its liabilities and its history, and it is the usual structure in France because it preserves contracts, licences and employment relationships. An asset purchase transfers a defined perimeter, which is attractive where the past is a concern, but it triggers specific rules: a going concern carries its employment contracts with it, certain leases and licences require consent, and the price is subject to particular publicity and creditor protection formalities. The tax outcome usually decides between the two, and it is modelled before the letter of intent is signed.

What does due diligence cover in France?

Corporate records and title to the shares, accounts and off balance sheet commitments, customer and supplier contracts including change of control clauses, employment matters and collective agreements, real estate and leases, intellectual property, litigation, tax and social security, permits and environmental matters, data protection and, where relevant, export control and sanctions exposure. Vendor due diligence is increasingly common in auction processes. The purpose is not exhaustiveness but identifying what will change the price, the warranties or the decision itself.

What protection does a warranty package give?

Warranties describe the company as at signing, and the indemnity obliges the seller to compensate for liabilities whose origin predates the sale. Its practical value depends on the cap, the floor and the individual threshold, the duration for each category, the exclusions, and the security given, whether escrow, bank guarantee or warranty insurance. A package without security is worth what the seller is worth on the day of the claim. The notification mechanism matters as much as the substance, because claims are frequently lost on the form and the deadline.

Which employee steps are mandatory before a sale?

In companies below the statutory size thresholds, employees must be informed in advance of a proposed sale of the business or of a controlling interest so that they have the opportunity to make an offer. Where a social and economic committee exists, it must be informed and consulted before the decision is taken. These steps have their own timetable, cannot be waived between buyer and seller, and a failure exposes the transaction. They are scheduled at the outset rather than discovered shortly before signing.

How is the price paid and secured?

Commonly by payment at closing with part of the price held in escrow, sometimes with a deferred element and an earn out linked to defined and measurable results. An earn out clause needs an unambiguous calculation method and rules on how the business will be run during the period, failing which it generates the next dispute. Where the price depends on completion accounts, the mechanism and the expert appointed to settle disagreement are set out precisely. Security for the price and security for the warranties are separate questions.

Which authorisations may be required?

Merger control where the turnover thresholds are met, foreign investment screening where a foreign investor acquires a target in a sensitive sector, and sectoral authorisations in regulated activities. Landlord consent, contractual change of control consents and, occasionally, a pre-emption right in favour of a public body also have to be checked. Each carries a timetable of its own, so the closing date is built backwards from the longest of them rather than from the commercial calendar.

What information must the seller disclose spontaneously?

Information that is decisive for the buyer’s consent. Article 1112-1 of the Civil Code, in force since 1 October 2016, requires the party who knows information whose importance is decisive for the other party’s consent to disclose it where the other party is legitimately unaware of it. Undisclosed pending litigation, the imminent loss of a major customer, a tax audit under way or a change of control clause in an essential contract clearly fall within this category. The buyer nonetheless retains a duty of diligence: what an ordinary due diligence would have revealed is harder to argue. Hence the value of documenting the questions asked and the answers received during due diligence.

Which change of control clauses should be checked before signing?

All those in the contracts on which the target’s value depends. Commercial leases, distribution agreements, software and technology licences, bank financing, agreements with public-sector customers and insurance policies frequently contain a clause allowing the counterparty to terminate or renegotiate on a change of control. A perfectly executed acquisition can thus lose most of its value in the weeks that follow. Due diligence must therefore list these clauses, and the timetable must allow for the necessary requests for prior consent, which take time. Discovering such a clause after closing leaves no room for manoeuvre, whereas before closing it can be dealt with by a condition or a price reduction.

Should an earn-out be provided for?

An earn-out, indexed to future results, often reconciles opposing views on value, but it moves the dispute rather than removing it. Three precautions make it workable. Define the indicator with absolute accounting precision, specifying the applicable standards and freezing the methods, because a mere change in cost allocation is enough to make the earn-out disappear. Regulate the management of the business during the reference period, so that the buyer’s decisions do not mechanically depress the indicator. And provide a mechanism for settling disagreements, an adversarial expert determination within a short time limit, failing which the earn-out will be argued before a court two years after the sale.

At what stage should a lawyer be involved in the transaction?

From the letter of intent, not when the sale agreement is drafted. The letter of intent, often seen as a preliminary document of no consequence, in fact fixes the essential parameters: the scope, the valuation method, exclusivity, the length of due diligence and the allocation of costs if the deal fails. What is conceded there is hard to renegotiate afterwards. Two other moments call for immediate involvement: delivery of the due diligence findings, which must be translated into clauses rather than remain a report, and the emergence of a difficulty with authorisations, where the reaction in the first days determines what follows. After signing, the adviser’s role becomes defensive, which always costs more.

How long should a warranty of assets and liabilities last?

There is no statutory duration: everything is negotiated, and practice has settled at around three years for general representations. The logic is not arbitrary. For tax and social security liabilities, the duration is aligned on the administration’s reassessment periods, so that the warranty covers the period during which a reassessment remains possible, in practice until the end of the third year following the sale. Some subjects call for longer, environmental matters first among them, where discoveries come late. Two parameters matter as much as duration and are less often discussed: the cap on the warranty and its triggering threshold.

Can the seller be sued after the warranty has expired?

Yes, and it is a widespread illusion that the contractual warranty releases the seller. Its expiry closes the contractual route, not the actions available under general law. An action for fraud remains open where the seller concealed decisive information, and breach of the pre-contractual duty of information under Article 1112-1 of the Civil Code may be invoked even without intent to deceive. These actions are time-barred after five years, running from the day of discovery and not from the sale, which makes them formidable years after the transaction. For the seller, the consequence is simple: a complete data room protects him better than a short warranty period.

Matters in this field are handled by Hervé Guyader, avocat at the Paris Bar and Doctor of Law. Page updated on 17 October 2026.