Crossing Borders | France Unlocked - Issue #4 – Between Law and Strategy: How French Lawyers Create Value in M&A
In French M&A, structure is substance.
Foreign investors often approach deals through valuation or control metrics — yet the real outcome depends on the architecture of rights, governance and timing.
A well-drafted contract doesn’t just reflect the deal; it defines its economics, its risks and its durability.
1. Control Is a Moving Target
In France, voting rights alone rarely tell the full story.
Control can stem from board composition, casting votes, or the approval thresholds embedded in the statuts and pacte d’associés.
For instance, a minority investor holding 35–40% may secure a strategic veto by conditioning major decisions (cession d’actifs significatifs, opérations sur capital, changement de gouvernance) to reinforced majorities.
Conversely, a majority shareholder may retain operational freedom through delegation of powers within the management board.
The balance between statuts (opposable to all) and pacte (binding only between signatories) is a constant exercise in geometry — one that determines where the real power sits.
2. The Pacte d’Associés as a Layered Instrument
Anglo-Saxon investors often assume that a shareholders’ agreement in France functions like an SHA in London or New York. It doesn’t.
French law distinguishes between opposabilité and validité.
A clause binding between shareholders may not be enforceable against the company or third parties unless mirrored in the statuts.
Drag-along and call option mechanisms, for example, require careful calibration to comply with French Civil Code provisions on conditional obligations and consent.
Moreover, clauses triggering penalties (clauses pénales) or automatic transfers must survive judicial scrutiny — which depends on proportionality and good faith. French contract law tolerates sophistication, but not imbalance.
3. Governance as a Deal Continuity Tool
Post-closing, French law offers an unusual flexibility — particularly through the SAS.
But that flexibility can be deceptive.
Without a clear separation of powers, the same freedom that attracts investors can lead to paralysis or abuse.
Structuring efficient governance requires anticipating deadlock and information asymmetry.
Typical instruments include:
advisory committees with defined consultative rights,
dual-manager setups balancing founders and investors,
reinforced reporting covenants and exit triggers tied to financial KPIs.
These mechanisms are not boilerplate. They ensure that decision-making capacity survives pressure, conflict or growth.
4. The Real Role of the Lawyer
In French transactions, legal drafting is only half the equation.
The other half lies in synchronizing legal instruments with economic intent — making sure that governance reflects the risk allocation, that tax structures follow the cash flow, and that the exit mechanics are legally viable in two or five years’ time.
The French lawyer’s craft, in M&A, is therefore strategic engineering: translating business ambition into enforceable, resilient legal form.
💡Tips for Foreign Investors
Unlike common-law systems, French M&A relies on formality and balance more than freedom of contract.
Key rights must be embedded in the statuts to bind all shareholders.
Earn-outs, options and penalties face stricter enforceability tests.
In France, precision — not precedent — is what protects value
The Axipiter View
French M&A is not about fighting the law — it’s about mastering its logic.
Where common-law systems rely on negotiation and precedent, France rewards structure, balance, and foresight.
Where common-law systems rely on negotiation and precedent, France rewards structure, balance, and foresight.
The best deals are not the most aggressive, but the most coherent: legal, tax and governance mechanisms aligned to a single strategy.
Those who understand that the law is part of the business model — not a constraint to it — are the ones who thrive here.
— Eric Kopelman, Partner
Let’s Talk
From deal structuring to shareholder alignment, Axipiter supports foreign investors through every phase of French M&A — securing control mechanisms, governance balance and long-term value creation.
📧 erick@axipiter.fr 📅 Book a strategy session with our M&A Desk 🌐 www.axipiter.fr