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Structuring the acquisition and growth of a pharmacy through an SPFPL

We advised a pharmacist who wished to acquire a shareholding in a pharmacy and gradually organise his professional wealth.

By Cassandre Nogues, tax lawyer·Published ·Updated

The situation

The transaction had to enable him to finance the acquisition, carry on his activity within the pharmacy and, in time, invest in other professional structures or bring in new pharmacists.

The client also wished to distinguish the income he needed for his day-to-day living from the profits he intended to keep and reinvest in his business.

Our support

  1. 01

    Choosing the operating and holding structure

    We compared several structures, in particular:

    • holding the pharmacy directly;
    • carrying on the activity within a professional practice company (société d’exercice libéral), in the form of a SELARL or a SELAS;
    • holding the operating company through a financial holding company for the liberal professions, or SPFPL.

    The SEL allows liberal professionals to carry on their activity within a company that has a commercial form but a civil purpose. The SPFPL, for its part, is a holding company dedicated to holding shareholdings in operating companies.

    In this matter, combining a SEL and an SPFPL met the pharmacist’s objectives:

    • to carry on his activity personally in the pharmacy;
    • to ring-fence the acquisition financing at the holding-company level;
    • to organise governance among the partners;
    • to keep a capacity for professional reinvestment;
    • to prepare the future evolution of the ownership.

    The formation and operation of pharmacists’ SEL and SPFPL are governed by rules specific to the profession, in particular as regards the composition of the capital, control by practising pharmacists and registration with the professional body (the Ordre).

    Point of attention. An SPFPL is not a mere wealth-holding company. It falls within a regulated professional framework and must be designed taking account of the rules specific to the profession concerned.
  2. 02

    Financing the acquisition of the shareholding

    We structured the acquisition around an SPFPL financed by:

    • a personal contribution from the pharmacist;
    • a loan taken out by the holding company;
    • the dividends that the SEL might distribute later.

    This structure allows the acquisition debt to be housed at the level of the entity that holds the shares. The dividends paid up by the SEL can thus contribute to repaying the loan, subject to compliance with the applicable legal, tax and financial conditions.

    We analysed, in particular:

    • the price and valuation of the shares acquired;
    • the level of debt the SPFPL could bear;
    • the cash needs of the SEL;
    • the pharmacy’s distribution capacity;
    • the projected repayment schedule;
    • the application of the parent-subsidiary tax regime.
    Simplified example: for a shareholding acquired for €1 million, the pharmacist may combine a personal contribution and a loan taken out by the SPFPL. The size of the financing must, however, remain consistent with the distributable profits of the operating company and its investment needs.
  3. 03

    Organising the flows and preparing the growth of the business

    We then defined how the structure would operate after the acquisition.

    Our work covered:

    • the remuneration paid to the pharmacist for his professional activity;
    • any management functions performed in the SEL and the SPFPL;
    • the distribution policy between the SEL and the holding company;
    • the repayment of the acquisition debt;
    • the retention of cash for future professional investments;
    • the agreements entered into between the companies;
    • the allocation of decisions among the partners.

    Particular attention was paid to the tax and social treatment of the remuneration and the dividends. Case law and internal work led, in particular, to examining the social-contribution treatment of dividends distributed by a SELARL to an SPFPL in a configuration where the practising professional controlled both structures.

    We also drew up a roadmap to allow the SPFPL:

    • to acquire other professional shareholdings later, within the applicable regulatory limits;
    • to bring in a new pharmacist partner;
    • to organise a gradual transmission;
    • to prepare the exit or replacement of a partner;
    • to keep consistent governance between the holding company and the operating company.
    Point of attention. The choice of an SPFPL must serve a genuine professional project: financing an acquisition, growing the business, bringing in new partners or preparing a transmission.

The result

The pharmacist was able to acquire his shareholding in the pharmacy through a structure suited to the rules of his profession and to his growth objectives.

The SEL was used as the operating structure, while the SPFPL made it possible to organise the ownership and financing of the shareholding. The flows between the companies, the professional’s remuneration and the repayment of the debt were built into an overall strategy.

The structure was also designed to remain flexible, so as to allow a partner to be brought in later, a new shareholding to be acquired or the business to be transmitted gradually.

This type of structuring is not reserved to pharmacists. An SPFPL may also be considered for other regulated liberal professions, in particular the medical, legal or technical professions, subject to the specific rules applicable to each. It should be noted that other forms of holding company may prove more appropriate depending on the situation.

This case was handled by the firm, in light of the law and case law in force at the time of the engagement, and in the light of circumstances specific to it. It is presented for illustration purposes only: it does not constitute advice and does not predetermine the treatment that might be adopted in another matter.