The transfer of a business marks a pivotal moment for any business owner. Far from being a simple technical transaction, it encompasses legal, tax, financial, and most importantly, human considerations. At a recent event hosted by Lombard Odier at the heart of the Unlimitrust Campus in Prilly, leading experts in law, taxation, wealth planning and corporate advisory gathered to share their insights and experience with a real-life case-study. Together, they provided answers to a central question: how can a business transfer in Switzerland ensure long-term success, for both the seller and the buyer?
To explore this important topic, the panel, moderated by Nathalie Brodard, founder and CEO of Brodard Executive Search and Brodiance, brought together a diverse group of experts: Marina Castelli-Joos, partner at the law firm id est avocats; Maxime Dubouloz, Director Corporate Advisory at Lombard Odier; Samuel Meylan, Head of Wealth Planning for the Swiss market at Lombard Odier Patrimonia; and Sébastien Torrent, Team Lead for Swiss and international clients in Lausanne at Lombard Odier.
In his opening remarks, Sébastien Torrent stressed Lombard Odier’s deep-rooted connection with business transfers: "Since it was founded in 1796, the bank has been passed down from generation to generation. Today, we are in the seventh generation," he noted, adding that the "transfer of wealth to future generations is therefore at the heart of our business, driven by an entrepreneurial spirit that makes up the very DNA of our firm."
Choosing the right structure: a decision with significant tax implications
The first step in any business transfer is selecting the most appropriate structure. As Marina Castelli-Joos explained, several mechanisms are available in Switzerland, including share sales, asset sale, donation or inheritance, and, in some cases mergers, each with its own set of advantages and disadvantages. "The choice depends on the company’s legal structure, the composition of its assets and liabilities, and the seller’s objectives," she said, adding that "in most cases, tax considerations determine the method of transfer."
The first step in any business transfer is selecting the most appropriate structure
Samuel Meylan warned of the potential pitfalls of a poorly planned business sale, particularly in the case of sole ownership: "If the business operates as a sole proprietorship or partnership, the sale carries significant tax implications. The gain is taxed as income and subject to social security contributions (AVS)," he explained. In contrast, if the business is structured as a corporation, the shares from part of your personal wealth and may, under certain conditions, qualify for a capital gains exemption, offering a more tax-efficient outcome.
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learn more Another key technical consideration is to observe the blocking period if the company is converted into a joint-stock company ahead of the sale: "Once the decision to sell is made, it is advisable to convert a sole proprietorship into a joint-stock company to benefit from tax neutrality on hidden reserves," he added. However, this neutrality comes with an important condition: a five-year blocking period. Otherwise, the hidden reserves will be subject to retroactive taxation."
Meylan also warned of another, more nuanced, but potentially costly, risk – fiscal reclassification: "It is important to ensure that the shares being sold are properly classified as part of your personal wealth. Otherwise, the tax authorities could classify them as business assets, which would invalidate the tax exemption." This risk is particularly relevant in cases involving recurring sales, or where shares have been strategically undervalued or overvalued.
Another important factor to monitor is indirect partial liquidation. "This situation typically arises when the company holds surplus assets that should have been distributed as dividends. In such cases, the tax authorities can tax part of the capital gain as income."
In the specific context of start-ups, another frequently encountered risk is the reclassification of part of the capital gain as a salary adjustment. "If the entrepreneur has been underpaid for years, the tax authorities may view part of the gain to be a taxable portion of salary," Maylan warned. To avoid such pitfalls, careful planning well in advance of a sale is essential.
Read more on our optimising your business sale here: Optimising the conditions for a company sale | Lombard Odier
Four steps to prepare for success
Marina Castelli-Joos structures the sale process in four distinct stages: preparation, negotiation and audit, execution of the sale, and the post-acquisition phase. The first step is often underestimated, yet it is critical to the success of all the subsequent stages: "This phase involves extensive preliminary work, which may include restructuring efforts by either the seller or the buyer," she emphasised.
Another essential step to prevent prolonging the process is to draw up a letter of intent: "Whether you are the buyer or the seller, it is vital to put the key commercial terms in writing from the outset to avoid months of negotiations," she said, adding that "These can be costly and ultimately unsuccessful if the parties' intentions were not clear from the outset."
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learn more The next stage is the audit phase, which includes confidentiality agreements, legal, tax, technical, and financial due diligence. This process can often drag on and become frustrating if the seller has not adequately prepared in advance.
In straightforward cases, the entire business transfer process can take between 4 to 6 months. However, more complex transactions can extend to 12, or even 18 months. "After a year has gone by, fatigue can set in. It’s important to keep the momentum going."
Finally, the post-acquisition stage plays a crucial role in stabilising the business and ensuring a smooth transition for all parties.
In straightforward cases, the entire business transfer process can take between 4 to 6 months. However, more complex transactions can extend to 12, or even 18 months
What role can Lombard Odier play in the transfer of a business?
For Maxime Dubouloz, Director of Corporate Advisory at Lombard Odier, business transfers are a multi-layered process: "The first layer is the personal tax situation of the entrepreneur and their family. There's no point in carrying out a high-value transaction if the tax structure isn't right," he explained, adding that "the second layer involves organising the staff and the structure of the business itself."
The preparation phase cannot be rushed, and is a critical foundation to support the seller. "You also need to put yourself in the buyer’s shoes," said Maxime Dubouloz. "With that mindset, the preparation phase takes at least one to two months. In some cases, it may require up to six months."
Read our three top tips for selling your business here: Tips for selling or transferring your company | Lombard Odier
When asked whether there are situations where it might not yet be worth going through the sale, Maxime Dubouloz noted that everything depends on the circumstances. "Given the current macroeconomic and geopolitical climate, many business owners approaching retirement are being advised to wait a little," he explained, "It's an opportunity to clarify things and get expert advice."
Sébastien Torrent highlighted the importance of breaking down silos in wealth management. "Today, many entrepreneurs manage their wealth in silos: private portfolio, business, pension plans, life insurance. This fragmented approach leads to unnecessary overlaps, unmanaged risks, and tax inefficiencies." To bridge these gaps, Lombard Odier has implemented a dual process: the wealth check, offering a consolidated view of assets, liabilities and cash flows; and the family check, designed to clarify a business owner’s objectives, for example, whether transferring the business to their children or employees, and under what inheritance or marital framework. This holistic approach allows for tax-efficient planning.
Lombard Odier has implemented a dual process: a wealth check, offering a consolidated view of assets, liabilities and cash flows; and a family check, designed to clarify a business owner’s objectives
One particularly effective tool discussed during the conference, was the often overlooked supplementary occupational pension planning (commonly known as Bel Étage). "In Switzerland, if you are insured to the maximum, you can reach extremely substantial amounts (well over CHF 10 million) up to CHF 17 million in a pension fund." Sébastien Torrent told the audience. He further noted that this strategy offers considerable tax optimisation benefits: "With a marginal tax rate of 41.5%, a CHF 100,000 buy in results in a tax saving of CHF 41,500 That's extremely effective! But not enough entrepreneurs take advantage of this opportunity."
When asked about the crucial points to address during contract negotiations, Marina Castelli-Joos states that two key factors are essential: price and the guarantees, explaining that the practice of fixed-price agreements has disappeared and are becoming increasingly rare: "Today, most transactions include price adjustments, earn-out provisions, a mechanism that links all or part of the sale price to the company's performance after the transaction, or even staggered payments." These mechanisms help distribute the risk between the buyer and the seller. However, implementing them requires precise, measurable, and verifiable indicators; otherwise ambiguity increases the risk of future disputes.
Whether it's a family buyout or a management buyout, the concept of fairness is a central issue
From the seller’s perspective, standard practice is to limit the timeframe of guarantees (between18 to 36 months), cap their amount (commonly 15% to 50% of the total price), and secure their enforcement (escrow account or deferred payment arrangements). Additionally, it may also be wise to take out M&A insurance, especially in large-scale transactions.
When discussing concrete examples in business succession processes, Maxime Dubouloz highlighted a key point: "Whether it's a family buyout or a management buyout, the concept of fairness is a central issue. When transferring to a child or an employee, it is important to manage the perception of fairness among the other stakeholders. Otherwise, it risks damaging family harmony or disrupting management unity." He also states that "in family buyouts, a discount of 30% to 40% is common, whereas in management buyouts, it typically ranges from 20% to 30%."
Passing on experience: Julien Favre and the acquisition of Pantucci Thermolaquage
Julien Favre, former manager at Procter & Gamble and Kraft Heinz, shared his experiences with the purchase of Pantucci Thermolaquage, an SME in French-speaking Switzerland specialising in treating metal surfaces. After he founded K2 Equity, a Swiss private equity company focused on acquiring and developing industrial SMEs, he started searching for a business to acquire and quickly identified Pantucci through a specialised broker.
In response to a question from Véronique Rossire-Pot, a banker at Lombard Odier, about the initial steps in the process, Julien Favre stressed that, "The first contact with the seller is really critical. I believe a large part of the success is determined at that moment. The impression that you make, the intentions you express, all of that matters." Julien Favre promptly drafted a letter of intent: "I took the time to sit down with them, point by point, to explain what I had in mind."
The audit, which comes next, is a delicate process: "This stage is not viewed as a sign of trust. It's more like looking under the bonnet of a car with a magnifying glass. You’re actively searching for vulnerabilities, and that’s never a comfortable experience." To ease the tension, Favre made the point of clearly explaining his requests and simplifying complex accounting terms, stressing that "this time wasn’t wasted. It helped prevent tensions."
However, something came to a standstill, Favre explained. The tax ruling allowing the real estate to be taken out of the company was refused: “It put a huge problem on the table. The file then remained frozen for several months. It was only once the seller had the support of a competent tax expert that a solution was found: transforming the sale of shares into a sale of assets.”
Business transfers in Switzerland cannot be left to chance. They demand a structured vision, careful management, tax foresight, and a deep understanding of the human dynamics at play
And, once the deal was signed, a new hurdle arose: adjusting the price in line with working capital. “Applying a working capital clause to sellers who have never heard of it and are not familiar with these concepts is very complicated”, he told to the audience. It took time and sparked a lot of discussion, but the issues eventually got resolved. Once operational, Julien Favre set three priorities: building trust with the teams, avoiding abrupt changes, and closely managing cash flow. He likened it to a substitute teacher walking into a new class, “a new leader has to assert their legitimacy while maintaining a balance."
These shared experiences highlight a key point: business transfers in Switzerland cannot be left to chance. They demand a structured vision, careful management, tax foresight, and a deep understanding of the human dynamics at play. The experts brought together by Lombard Odier emphasised that all these aspects –legal, financial, and emotional– need to be well coordinated to transform a complex technical transaction into a successful one. Anticipate, surround yourself with the right people, and structure every step in the process. These are the keys to a resilient, future-ready business transfer.
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