Proposed Jacob Law Would Facilitate Transfers of Businesses

In late March 2005, Christian Jacob, Minister for Small and Medium-Sized Enterprises, Trade, Small-Scale Industry and the Professions, presented a bill regarding businesses to the Council of Ministers.

10 June 2005

Business transfers are a priority in this bill, which, as a result, includes specific measures in this regard. These measures include suppression of taxes on the benefits made by the assignor (if he or she has participated in the business for more than 15 years) and the possibility for those who take over the business to deduct from their taxable incomes the interests on the loans taken to finance the reopening (if the business in question is subject to the corporation tax. These measures must be confirmed during 2005, when the Assembly and the Senate analyze the bill.

The Seven Advantages of Transfers to Worker Cooperatives

Smoother and more motivating labor relations, guaranteed job permanence and conservation of local jobs. Transferring to a worker cooperative implies numerous advantages for the business, the workers, and the area. Let’s take a general look at the seven points.

Maintaining Jobs

When a small or medium business owner retires, the risk of job loss is high, either total loss if the business disappears for lack of buyers, or partial loss, if the new owner considers the enterprise essentially a financial investment, or eliminates certain positions that duplicate operations he or she already owns. In contrast, transfer to workers guarantees the conservation of jobs. “When the workers are notified with sufficient anticipation that their bosses are going to retire, we can orient them toward the cooperative solution,” explained Alain Bonamy, General Secretary of the French Federation of Cooperatives and Artisans Groups. He pointed out that, “In artisanry, business transfers are an ever greater concern.”

Taking One’s Professional Future into One’s Own Hands

For many workers, the principal advantage of transfer to a worker cooperative is taking charge of one’s own destiny. “Take note,” says Michel Famy, Development Manager for the worker cooperatives UR Paca, “business transfers are still difficult operations. It is often necessary to have strong personalities in the group that can more forward the administrative paperwork and guarantee consolidation during the first years.”

Maintaining Local Employment

When its owner retired in 1984, the workers of the General Mechanics cooperative CMGM in Monastier-sur-Gazeille wanted to continue working together in their town, which is located in an isolated enclave of Haute Loire. "On January 1, 1985,” explains Guy Varennes, the current Manager, “we re-acquired the building and machinery. We were ten workers who had to come up with the necessary capital from our own personal finances.” The ten knew each other well and wanted to work together. “Today CMGM has 20 member-workers,” it contracts young people in the region and has become the biggest business in Monastier.

Returning Shared Motivation to Workers

"At the beginning, it’s an adventure,” says Varennes, CMGM’s Manager. "Before accepting the challenge of transforming our business into a worker cooperative, we discussed it among the employees.” It was necessary to be assured of a shared motivation. At first, the workers accepted the need to make economic sacrifices in order to reactivate the business. “We stayed united in order to preserve our jobs. There is no choice but for everyone to be involved,” says Guy Varennes. “Everyone must lend a hand. We don’t count our hours of work. We train the youngest workers. But the motivation is also financial. There is no reason why the initial contribution from members should be disproportionate, if other worker cooperatives provide capital, or Banks like Crédit Coopératif participate in the initial investments”. "Since the enterprise had a small volume of business and we were six potential members, we had little capital to give,” points out Pierre Baillet, manager of the Laporte de Samadet (Landas) worker cooperative.“ Since transfer in 2000, the volume of business in this enterprise, which specializes in cabinetmaking and commercial exhibits, tripled until it stabilized at 1.4 million euros. “And the workers had a much greater participation in the profits than in a traditional small or medium enterprise!” commented Pedro Baillet.

Conserving the Family Dimension

When it was necessary to solve the equation of conserving the family dimension of its business, at the same time maintaining its independence, the brick factory Bouyer-Leroux, in Séguinière (Maine-et-Loire), decided that the solution lay in creating a worker cooperative. "Making the workers members seemed obvious to us,” remembers Georges-Marie Leroux, President of Bouyer-Leroux. The notion of going from a family business to a worker cooperative was accepted by all. “Since 1981, the cooperative culture has become an integral part of the history of Bouyer-Leroux, which today has 300 workers.” Alain Chenebeau, the former President of EGA Electricité en Foix (Ariège),
feels satisfaction from the fact that the business that he created in 1985 today guarantees jobs for 30 member-workers. “I accompanied the business until transfer in 2000,” explained the person who later became mayor of the neighboring municipality of Ax-les-Thermes. “And I continue to stay informed of its results."

Benefiting from Financial Tools from the Worker Cooperative Movement...

The numerous microenterprises and small and medium businesses whose owners retire are not of interest to financial groups, which specialize in salvaging businesses, nor to larger businesses. They are too small, their profits too limited, their operations insufficiently innovative. Local solutions (business managers, competing microenterprises) frequently fail for lack of sufficient financial resources. By opting for transfer to a worker cooperative, it is possible to benefit from the services of the worker cooperative movement’s financial institutions, which can complement contributions by workers and allow the business to be acquired at a fair value.

...And the Direct Support from Other Worker Cooperatives

Michaux, a printing press located in Bellegarde-sur-Valserine (Ain), became a worker cooperative when its owner retired in 1997. To maintain its jobs, it had to make new investments, and therefore needed fresh money. This was provided by, among others, the Sadag worker cooperative, a neighboring printing press, which acquired 49 percent of the social shares of the Michaux cooperative. Christiane Marandet, Sadag’s accountant, also became the first manager of the Michaux cooperative. The result: jobs were consolidated in both businesses.

International Organisation of Industrial, Artisanal and
Service Producers' Cooperatives

Secretariat: C/O European Cooperative House - avenue Milcamps 105
1030 Brussels, Belgium
Tel: +32 2 543 1033, fax: +32 2 543 1037
E-mail: cicopa[at]

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