Taking over a business is an exciting and complex process that requires meticulous preparation. Whether you’re a seasoned entrepreneur or a novice, taking over a business in Arras presents many opportunities. Located in the dynamic Hauts-de-France region, the town offers a wide range of businesses available for takeover, from traditional shops to more specialized activities. Of course, it’s always possible to consider setting up a new business from scratch, but in this article, we’ll take a closer look at the various stages involved in a successful business takeover in Arras, from finding the right business to negotiating with the seller.
Identifying takeover opportunities in Arras
First and foremost, it’s essential to identify the businesses on the market to be taken over. Arras and the surrounding region offer a vast choice of businesses for sale, from bakeries and restaurants to service and construction companies. A number of specialized platforms, as well as local networks such as Transentreprises, make business transfer offers available.
For example, brasseries and restaurants can be taken over for around €90,000, while more technical businesses such as plumbing and heating companies can be valued at up to €650,000. A key first step is to clearly define your search criteria, based on your skills, budget and ambitions. You can opt for a sector of activity in which you already have some expertise, or launch yourself into a completely new field. Take the time to study companies’ sales figures and profitability. High-potential companies often have sales of between €200,000 and €1.5 million, depending on the sector.
Don’t hesitate to visit several companies to get a better idea of their working conditions, the state of the premises, and the dynamics of the team in place.
These are key factors in determining the viability of your project.
Calculate costs and prepare financing (the business plan stage)
Once you’ve identified the business you want to take over, the next step is to evaluate the actual costs involved. This assessment must be rigorous, as it determines not only the amount to be financed, but also the future viability of your business project. The aim is to establish an accurate and complete estimate of the financial resources required to ensure the continuity of the business and envisage prospects for growth. To achieve this, you’ll need to include a series of financial and legal elements in your business plan, the cornerstone of your takeover project.
Assessing costs: from audit to takeover offer
The first step in this financial evaluation is an in-depth audit of the company you are considering taking over. The purpose of this audit is to determine the real value of the company, its assets and liabilities.
- Tangible assets: These are the company’s physical assets. They include premises, equipment, vehicles, furniture and inventories. The valuation of these assets must take into account their state of preservation, their replacement value and their usefulness in the pursuit of the business. For example, if you are taking over a bakery, equipment such as ovens or refrigerated display cases will be essential in estimating the replacement or maintenance costs to be expected ;
- Intangible assets: These are non-physical elements that are just as essential to the business, such as brand, reputation, customer files and current commercial contracts. In sectors such as catering or retailing, an establishment’s reputation can be a major asset. The valuation of these assets is more complex, as their value is based on qualitative criteria such as customer loyalty or brand visibility in the local market ;
- Debts and contractual commitments: We need to check all the company’s debts, whether they be bank loans, supplier debts, leasing contracts or other contractual commitments (forthcoming redundancies, ongoing litigation). These items can have a direct impact on the sale price, and require particular attention to avoid unpleasant surprises.
Once you’ve assessed these factors, you’ll need to compare the results obtained with current selling prices in the sector and in the business area in which you’re located. For example, a breakdown service business could sell for €320,000 with sales of €200-350,000, reflecting both the tangible assets and current profitability of the business in the Hauts-de-France region.
Structuring the financing of a business takeover in Arras: contributions, loans and cash flow
The financing structure of your takeover will depend on a number of factors, including your ability to make a personal contribution, the financing options available and the cash flow required to ensure the first few months of operation. The objective is to find the right balance between these different sources of financing.
- Personal contribution: Your personal contribution is the foundation of your project. The greater the amount, the greater the credibility of your case with banks and financial partners. We recommend that you bring in at least 20-30% of the sale price, to minimize your borrowing requirements and strengthen your financial leverage. This personal contribution can come from savings, the sale of assets or specific grants ;
- Bank loans: Banks play a key role in financing takeovers. It is essential to prepare a solid file, with a detailed business plan, to convince financial institutions of the viability of your project. This plan should include a cash-flow analysis, a statement of working capital requirements and sales forecasts. A conventional bank loan can cover a large part of the purchase price, generally over a period of 5 to 10 years, with a variable interest rate depending on the risk perceived by the lending institution ;
- Bank guarantees: To secure the bank loan, guarantees may be required. These may include a mortgage on your personal assets, a pledge of shares in the company, or a personal guarantee. There are also public guarantee schemes, such as Bpifrance, which can cover part of the bank’s risk, making it easier to obtain the loan ;
- Honor loans and local subsidies: Local financial aid is often available to business buyers. The “prêt d’honneur” is a common example in the Arras region. This is an unsecured, often zero-interest loan of up to €15,000 for a takeover, to be arranged with Initiative Grand Arras. It helps to strengthen equity capital, thereby facilitating access to a complementary bank loan. These local aids may be supplemented by subsidies or tax exemptions, depending on the type of business and its geographical location (e.g., revitalization zones) ;
- Cash flow and working capital requirements (WCR): Once the takeover has been completed, it’s essential to ensure sufficient cash flow for the day-to-day running of the business. WCR represents the cash requirement to cover the time lag between cash inflows and outflows (customer and supplier payments). A precise estimate of this requirement should be included in your business plan to avoid cash flow tensions in the first few months. For example, in a retail business with short supplier payment terms and cash sales, the WCR will be limited. On the other hand, in a service business where customer invoices are paid in 30 or 60 days, the WCR may be more substantial.
Building a realistic business plan
The business plan is the key document not only for convincing financial partners, but also for steering the success of your project. It must include realistic financial projections, based on a rigorous analysis of existing figures and the company’s development prospects.
- The projected income statement: This document should show revenues and expenses over a period of 3 to 5 years. When estimating revenues, it’s important to take into account the potential evolution of sales, particularly in relation to competition, local market trends, and the actions you intend to take to develop the business (new products, new markets). As far as expenses are concerned, remember to include fixed costs (rent, salaries) and variable costs (supplies, raw materials), not forgetting the investments needed to modernize or improve the business ;
- Cash flow forecast: This table tracks cash inflows (sales, contributions, loans) and outflows (purchases, expenses, loan repayments) on a month-by-month basis. It is an indispensable tool for anticipating periods of slack and ensuring that the company will always have sufficient liquidity to meet its obligations ;
- The cash flow statement: This document brings together the company’s financial requirements (investments, debt repayments, increase in WCR) and the resources mobilized (contributions, loans, subsidies). It is used to check the balance between needs and resources, thus guaranteeing the financial soundness of the operation ;
- Risk analysis: A good business plan includes an analysis of the main risks the company could face (drop in activity, rise in costs, loss of key customers) and proposes solutions to deal with them. This is a reassuring element for financiers, who will appreciate your ability to anticipate and manage the unexpected.
By drawing up a rigorous, detailed business plan, you’ll maximize your chances of a successful takeover, while reassuring your financial partners about the viability and potential of your project.
Negotiating and finalizing the takeover with the seller
Once the financial aspects have been clarified, it’s time to negotiate with the seller. Dialogue with the current owner must be constructive, as a good understanding will facilitate the transition. The proposed sale price can often be discussed on the basis of certain criteria: the state of the inventory, the age of the equipment, or the development prospects. Here are a few tips to help you negotiate successfully:
- Get detailed information: Request all the documents you need to analyze the company’s financial health (annual accounts, contracts, commercial leases) ;
- Point out weaknesses: If you spot weaknesses (recent drop in sales, declining clientele), use them as arguments to justify a price cut ;
- Propose a payment plan: A vendor loan is a good alternative for spreading the cost of the takeover and easing your cash flow ;
- Plan a transition period: In some cases, it’s possible to agree with the seller that he or she will remain with the company for a few months after the takeover, to facilitate the handover. This helps maintain relationships with customers and suppliers, and ensures continuity.
It is also advisable to enlist the support of experts such as the consular chambers (CCI and CMA in particular), BGE, a lawyer specialized in business transfers, and a chartered accountant to secure the process. Their expertise will be invaluable in analyzing the legal, tax and financial aspects of the takeover.
To conclude on business takeovers in the Arras region
Taking over a business based in Arras in the Pas-de-Calais region can be a great opportunity for those looking to launch or diversify their business. The key to success lies in careful preparation at every stage: identifying bargains, assessing costs, planning financing, and finally, skilful negotiation with the seller. With the support of excellent local structures and professionals, you’ll benefit from invaluable support to succeed in this entrepreneurial adventure. Finally, don’t underestimate the importance of understanding the industry you want to enter, to ensure the long-term future of your new business.
R.C.
