Bons de Souscription de Parts de Créateurs d'Entreprise (BSPCE) and Bons de Souscription d'Actions - Accord d'Investissement Rapide (BSA AIR) are essential financial instruments for growing companies.
They facilitate the attraction and retention of talent, as well as the mobilization of capital. However, their implementation requires a precise valuation of the company, in compliance with current tax regulations. The legislative changes of spring 2024 have provided significant clarification in this area.
1. Understanding BSPCE and BSA AIR
BSPCE : A profit-sharing tool for employees
BSPCEs offer employees and managers the opportunity to subscribe to shares in their company at a price fixed at the time of allocation. This mechanism aims to align the interests of employees with those of the company, by involving them in its future growth.
BSA AIR: Rapid financing leverage
AIR warrants enable investors to subscribe for shares at a later date, often as part of a rapid fund-raising operation. They feature floor and cap valuations, offering flexibility in negotiating investment conditions.
2. Valuation techniques adapted to BSPCE and BSA AIR
The valuation of securities for BSPCE and BSA AIR issues is based on recognized financial methods, adapted to the company's maturity and business sector.
Commonly used methods :
- Sector comparables method: Analysis of recent transactions in the same sector to estimate the company's value.
- Discounted Cash Flow (DCF) method: Projection of discounted future cash flows to determine the company's current value. Particular attention must be paid to the business plan, as it will strongly influence the results of this valuation.
- Patrimonial method: Valuation based on the company's net assets, relevant for structures in the start-up phase with high investment stakes in technology and provided they are correctly accounted for.
Specific approaches for start-ups :
- Berkus method: Assigning values to qualitative criteria such as idea, team, prototype, customer relations and distribution channels.
- Venture Capital method: Estimation of the company's final value (exit or IPO) and application of an expected rate of return to calculate its current value.
- KPI multiples method: Use of multiples based on relevant indicators such as the number of active users or monthly recurring sales (MRR).
3. Tax constraints and legislative changes in 2024
Legal obligations regarding recovery
The acquisition price of the BSPCEs must comply with the provisions of Article 163 bis G of the French General Tax Code (CGI). In particular, if a capital increase has taken place in the six months preceding the grant of the BSPCEs, the acquisition price may not be lower than the issue price of the shares at the time of this increase, unless a discount is applied for good reason.
New legislative developments for spring 2024
Legislative developments in the spring of 2024 have brought important clarifications:
- Application of the discount for illiquidity: The French tax authorities have clarified that the illiquidity of shares may constitute a difference in rights giving entitlement to the application of a discount on the acquisition price of shares subscribed to in exercise of BSPCEs. This discount may be justified by non-transferability clauses or preferential liquidation clauses, whether statutory or contractual. Bofip
- Clarification on tax deferral: The Conseil d'Etat has overturned the administrative doctrine that excluded gains arising from the contribution of securities subscribed in exercise of BSPCEs from the tax deferral mechanism provided for under article 150-0 B of the CGI. From now on, these gains can benefit from the tax deferral, thus avoiding immediate taxation when the securities are contributed. Deloitte Avocats Blog
- Possibility of exercising BSPCEs via the PEA: It is now possible to exercise BSPCEs using funds available in the cash account of the Plan d'Épargne en Actions (PEA), offering greater flexibility to beneficiaries. Deloitte Avocats Blog
4. Supporting XVAL in the valuation of BSPCE and BSA AIR warrants
At XVAL, we understand the complex valuation challenges involved in issuing BSPCEs and BSA AIRs. Our expertise enables us to support you in :
- Detailed valuation reports: in compliance with legal and tax standards, to secure your operations.
- Justification of discounts applied: In the event of impairment or differences in rights, based on recognized methods.
- Analysis of legislative changes: to adapt your practices to the latest regulatory requirements and optimize your profit-sharing and financing strategies.
Rely on XVAL for accurate and compliant valuation, guaranteeing the success of your strategic operations:
Conclusion
Valuing BSPCEs and BSA AIRs is a delicate exercise, requiring a mastery of financial techniques, tax constraints and recent legislative developments. As a trusted partner, XVAL is positioned as a key player in supporting companies in these strategic steps. Contact us today to find out more about our services and secure your valuation operations.
