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MAKING A SUCCESS OF YOUR RE-INVESTMENT THROUGH A CONTRIBUTION-ASSET DEAL

( 150 0B TER )

The transfer of shares to a new holding company created for the purpose, in order to benefit from a tax deferral on capital gains.

 

In this case, the gains generated by the sale of the company, which takes place at a later date, must be reinvested in order to benefit from this tax deferral (Article 150-0 B Ter of the CGI).

 

To do so, you need to reinvest 60% of the proceeds from the sale of your company, either directly or via funds eligible for the scheme, within two years of the sale.

 

A growing number of funds meet the eligibility criteria, but not all are created equal.

5 key factors for successful reinvestment:
  • 1 - CHOOSING THE RIGHT MANAGEMENT COMPANIES

    If you are making a long-term investment, you need to be sure that the management company that will manage your assets is reliable and long-lasting.

  • 2 - UNDERSTANDING FUND PERFORMANCE

    We've had more than 10 years of free money, but that's no longer the case with rising interest rates, so we need to be sure of the level of leverage used in the fund, and identify the factors that are expected to add performance to your investment.

  • 3 - CHOOSING THE RIGHT MILLESIME


     

    SEE IF NOT MORE RECENT?

    The growing number of players in the management of funds of this type has led to an increasing dispersion of returns, which in turn means a growing need for ex-ante analysis in order to make the right choice.

  • 4 - DIVERSIFY YOUR PORTFOLIO

    Diversification is a golden rule when it comes to investing, and even more so when it comes to private equity, which is a long-term investment. In addition to avoiding the risk of capital loss and default, sector and geographic diversification ensures a decorrelated portfolio. In addition, liquidity risk is often underestimated by transaction advisors (see point 5). Depending on the size of the portfolio, a minimum of 4 to 6 funds seems optimum to us, which corresponds to the classic level of diversification found in institutional fund management...

  • 5 - CONTROLLING LIQUIDITY RISK

    Liquidity in the prospectus


    Liquidity in prospectus


    Liquidity at the end of the day

    The principle of private equity is that shares are not listed on an organized market. The sale of each shareholding is therefore dealt with on a case-by-case basis, which makes the sale process relatively lengthy, and the investor cannot, as on the stock market, sell his shares in a matter of seconds and immediately receive the cash from the sale.
    Products are often presented on sales sheets with a holding period that does not include possible extension periods, whereas a private equity investment should be considered as being for the entire period, i.e. 12 years in the longest cases! It is therefore imperative to be accompanied by a specialist who can identify the true maximum duration of your investment.


    What's more, in certain specific cases (difficulty in disposing of a major fund asset, for example, or the appointment of a liquidator in the event of manager bankruptcy or embezzlement), liquidity may be higher than that stipulated in the prospectus, in order to protect unitholders.

     

    But there are also other important factors for which our customers often need assistance:

    • Unfamiliarity with private assets and their complex workings
    • Funds have different marketing periods, and it is often more interesting to enter at the end than at the beginning (see the first assets in the portfolio).
    • These are closed-end funds with vintages, so your usual partner may not have funds available all the time.
    • Company disposals are by nature non-linear for a firm, a lot of time spent in selecting and concluding distribution contracts for few deals, it's often not profitable for our customers who prefer the help of a dedicated platform.

     


    Your LS Advisors partner:

    • Selects the best 150 0BTer funds for you from the 60 or so funds in France that meet your requirements;
    • Explores the specific features of each fund, so you don't get any unpleasant surprises;
      Provides competitive intelligence on funds;
    • Gives you access to themes as diverse as real estate, start-ups, forests, wine, food and beverages... ;
    • We can also take care of the financial management of the non-reinvested portion (40%).