The 2013/01/28 at 08:01
Only 5 % of French enterprises with over 500 employees are independent. The reason for this is the tendency towards a massive absorption of SMEs by large groups. This worrying observation, pointed out by a report drafted by French Senator Bruno Retailleau, in 2010, today has triggered lively reactions from the Chambers of Commerce of Montpellier and the department of Hérault.
In an official press release dated 18 January, the heads of the department's CCIs, with the support of a number of local parliamentarians, have decided to sound an alarm and to publicise the need to intervene in this domain. They wish for the adoption of a bill aiming to protect France's VSEs and SMEs in the event of takeover by a large group. "During this difficult period, it is absolutely indispensable to facilitate the growth of our SMEs by drawing capital from large groups, but without slowing down local dynamics," explains Jean-Michel Germa, the company head this initiative who founded La Compagnie du Vent. This bill is being requested at a time when, to simulate the development of SMEs and facilitate their evolution into intermediate-sized enterprises, the French government has set up the Banque Publique d’Investissement (BPI or Public Investment Bank). "Even if this measure is positive, it is not enough and will not shelter SMEs from the restructuring decisions undertaken by the groups that absorb them," he continues. Economic stakeholders throughout the Languedoc-Roussillon region hope to launch a great national debate on this issue.
France is regularly accused of having too few intermediate-sized enterprises. The latter are twice as numerous in Germany, and represent a major share of Germany's economic prowess. They are often characterised by seductive sales performances and are an important source of job creation, as they are heavily involved in regional activity. "One of the major difficulties when large groups become majority stakeholders of our SMEs is to maintain the local dynamic of value generation driven by the founders, and thus the development of local employment," believes Jean-Michel Germa. Of course this is not a matter of bringing SMEs in conflict against large companies, for it should be noted that "relationships between them are natural", especially when an SME has acquired savoir-faire or a specific technology, and it needs capital to ensure its growth. Unfortunately, when raising funds, founders often lose control of their company, as they are forced to hand over a majority of their stake.
In their press release, the CCIs essentially point fingers at the lack of regulation over capitalism in France. In Germany, the law protects SMEs in this case. When a group makes decisions that affect the interests of a company it controls, it is obliged to directly compensate the minority shareholders impacted by the operation. Rather than having to generally pay out substantial sums, large groups prefer to develop the assets of the subsidiaries they control and the savoir-faire of those who have founded these subsidiaries. In addition, the latter are generally well-positioned to develop these skills. In this way, German SMes are less often absorbed by their majority stakeholders, hence taking advantage of their protection to develop and become flourishing exporter intermediate-sized enterprises that are strongly rooted in the economic fabric of the German Länders. "Meanwhile, in France, our big companies, free to privilege strategies optimising the short-term financial yield of their capital, apply what they call a group strategy, without taking into account social and regional restrictions. This policy namely consists of transferring the savoir-faire of the SME that they control, or even certain of its assets, to subsidiaries 100 % held by them," emphasises Jean-Michel Germa.
It should be noted that assets in question may be equipment and savoir-faire as well as human skills. The Chambers of Hérault also specify that "retrenchments and intra-group mobility usually end up definitively emptying the SME of its value. The latter is then entirely absorbed or else vegetates a few years before vanishing."