M & A – Mergers & Acquisitions

In practice, the situations arising involve:

• predominantly the succession of one partner
• more rarely the succession of all partners.

Departure of all partners

If all partners sell, the situation is the same as that involving a sale by a sole trader.

Departure of one partner

If a previous partner transfers his entire share to a successor, the following prerequisites must be met:

• the partnership agreement must make express provision for the entry and departure of partners (or a continuation clause)
• approval of the remaining partners
• departure of the previous partner
  • termination of the partnership for the departing partner, notwithstanding its continuation for the remaining partners (Article 576 of the Swiss Code of Obligations)
  • claim for redemption against the partnership (Article 580 of the Swiss Code of Obligations)
• entry of the new partner
  • obligation to invest a capital amount in the partnership in line with the stake in the partnership.

Settlement of the redemption claim

Principle

The departure of a partner establishes entitlement to a claim to redemption (Article 580 of the Swiss Code of Obligations).

Basis for assessment

Unless specified otherwise in the partnership agreement, the redemption claim will be determined as follows:

• stake in the capital as reported in the accounts
• share of hidden reserves
• share of any goodwill.

Nature of assessment

• at going concern values and not liquidation values (see BGE 93 II 247).