The price is agreed. Due diligence is progressing. The lawyers are negotiating the share purchase agreement. Both sides are working towards a signing date.
For a foreign buyer acquiring a company in France, one question should be raised early: does the transaction require prior consultation of employee representatives?
The answer can affect when the parties are able to commit to the acquisition.
Handled early, this French legal requirement can be integrated into the negotiations. Identified shortly before signing, it can disrupt a timetable that everyone assumed was achievable.
Understanding the requirement is therefore part of preparing the deal.
French CSE consultation: a requirement to assess early
The French employee representative body, the Comité social et économique (or CSE, commonly referred to as the French works council) has information and consultation rights over certain decisions affecting the business.
In companies with at least 50 employees, these include changes to their economic or legal organisation. An acquisition may therefore require consultation, depending on its structure and the entities affected.
The assessment should establish which representative bodies need to be consulted, on what matters and under which procedural rules. The target’s CSE may be only part of the analysis: consultation requirements within the seller’s or buyer’s organisation may also need to be considered.
These questions belong in the initial transaction planning, alongside due diligence, financing and regulatory approvals.
Why consultation must come before the acquisition decision
Where consultation is required, employee representatives must receive sufficient information and a meaningful opportunity to express an opinion before the relevant decision is taken.
That sequence matters.
An international buyer may be familiar with signing a binding acquisition agreement and making closing conditional on outstanding procedures. French employee consultation cannot simply be treated as another closing condition if signing has already made the relevant decision irrevocable.
The process must concern a proposal on which a decision remains open.
At the same time, consultation requires a sufficiently developed project. Employee representatives need meaningful information about the proposed transaction and its expected consequences.
The practical challenge is to bring the project to a stage where it can be usefully presented, while preserving the freedom to decide after consultation.
Running consultation alongside SPA negotiations
In practice, parties often seek to complete consultation while due diligence and negotiation of the share purchase agreement (or SPA) are still underway.
The aim is to bring those workstreams together: once consultation has been completed and the contractual terms are finalised, the parties can proceed to signing.
This requires coordination between the deal teams, management and employment counsel.
Launching consultation too late can postpone signing. Launching it before the project is sufficiently defined can make the information provided inadequate. Material changes during negotiations may also require the information to be updated and their procedural consequences assessed.
For the buyer, this means contributing early to a clear account of the acquisition rationale and the intentions for the business. Where plans remain undecided, that uncertainty should be explained accurately.
The consultation materials, transaction documents and communications to employees should describe a consistent project.
Does the French works council have a veto?
Under the ordinary information and consultation framework, the CSE expresses an opinion; it does not approve the acquisition.
An unfavourable opinion does not, in itself, prevent the transaction from proceeding.
However, the procedure must be properly conducted. Employee representatives need adequate information, time to examine it and responses to their observations. Disputes over the adequacy of information or the consultation process can affect the timetable.
This distinction helps foreign buyers understand the purpose of the exercise: the company must allow informed consultation before the relevant decision, without making the commercial outcome dependent on a favourable opinion.
How long does CSE consultation take?
The applicable timetable should be checked at the outset, including any agreement governing consultation periods.
In the absence of an applicable agreement, the ordinary period is generally one month. It extends to two months where an expert is involved and, in certain consultations involving both central and establishment-level bodies, three months.
An opinion may be issued before the applicable period expires. Conversely, preparing the information package takes time before that period starts, and procedural disputes may affect the expected schedule.
A credible signing date must reflect both preparation and consultation, as well as the progress of the SPA negotiations.
Where does a put option agreement fit?
A promesse unilatérale d’achat, commonly described as a put option agreement, can be used where the buyer needs to commit before consultation has been completed, while the seller retains the freedom to decide afterwards.
It is one available transaction structure.
Parties may instead organise the process so that consultation is completed before they sign the SPA directly. That approach avoids introducing a separate option agreement where the timetable allows it.
The appropriate structure depends on the deal’s commercial constraints, the stage of negotiations and the consultation requirements.
AXIPITER’s perspective: anticipate the French signing requirements
Identifying French employee consultation requirements early allows the parties to organise the process alongside due diligence, financing and SPA negotiations, with a realistic route to signing.
A well-prepared French acquisition timetable starts with understanding what must happen before the parties commit.
— Eric Kopelman, Partner – AXIPITER | Corporate M&A
France Unlocked is published by Axipiter’s M&A team, focused on providing actionable legal insight for cross-border investors.