SA vs Ltd: which structure for transferring your business?

Why does the legal form influence business succession?

Your company's legal structure is not simply an administrative detail: it constitutes a determining factor in the success of your transfer. Here's why this choice deserves your full attention well before considering the sale.

Impact on the taxation of the sale
The legal form directly determines the tax regime applicable upon sale. An SA can benefit from partial exemption on capital gains under certain conditions (particularly for qualifying participations), whilst a sole proprietorship will see its gains taxed as ordinary income, with a significantly heavier tax burden.

Attractiveness to buyers
Investors and institutional buyers overwhelmingly favour SAs for their transparency, clear capital structure and ease of share transfer. An Ltd, with its restrictive clauses and notarial deed requirement, can dampen the interest of certain potential acquirers.

Administrative complexity and timescales
Transferring an SA can be done through simple share transfer, whilst an Ltd requires an authentic notarial deed and approval from the partners. These process differences directly impact timescales, costs and the fluidity of the transaction.

Financing the takeover
Banks and financial institutions generally grant financing more readily for the acquisition of an SA, considered more structured and transparent. This factor can make the difference between a transaction that materialises and a missed opportunity.

According to Swiss statistics, approximately 60% of business transfers involve SAs, 30% Ltds and only 10% sole proprietorships. This distribution directly reflects market preferences and the practical advantages of each structure.

Crucial point: The choice or transformation of structure should ideally take place 5 to 10 years before the planned sale to maximise tax advantages and allow the company to build up a track record in its new legal form, thus reassuring potential buyers. To understand the entire transfer process, consult our complete guide to selling your business in Switzerland.

Comparative table: SA vs Ltd vs sole proprietorship

To help you quickly visualise the differences between the three main legal forms in Switzerland, here is a comparative table summarising the essential criteria for business succession.

Key points to remember:

• The SA clearly dominates for external sales and tax optimisation

• The Ltd remains relevant for family transfers where control is a priority

• The sole proprietorship must imperatively be transformed several years before any planned sale

• Transformation costs are largely offset by tax savings and increased valuation

This table illustrates why the choice of legal form is never neutral in a succession strategy. Let us now analyse each structure in detail.

SA (Société Anonyme): the preferred structure for transfers

The SA (Société Anonyme) stands out as the reference legal form for business transfers in Switzerland, particularly when it involves sales to external buyers or institutional investors. Let's examine why this structure offers decisive advantages for optimising your SA sale.

Advantages of the SA for sale

Free transferability of shares
The main asset of the SA Switzerland transfer lies in the free transferability of shares. Unlike the Ltd, registered or bearer shares can be transferred without cumbersome formalities, except for specific statutory restrictions. This fluidity considerably accelerates the sales process and reduces the risks of blockage.

Maximum attractiveness to investors and institutional buyers
Investment funds, family offices and professional buyers overwhelmingly favour SAs for their clear capital structure, formalised governance and transparency. A well-structured SA can attract up to 40% additional potential buyers compared to an equivalent Ltd.

Advantageous taxation: partial exemption on capital gains
One of the major tax advantages of the SA sale concerns the partial exemption on capital gains under conditions of qualifying participation (generally 10% of capital and held for at least one year). Depending on the canton, this reduction can reach 50% to 70% of taxation, generating substantial savings during the transfer.

Clear separation of personal/professional assets
The SA guarantees a complete legal separation between the shareholder's assets and those of the company. This protection limits liability to contributions and considerably reassures buyers, who inherit no personal liabilities from the seller.

Facilitates bank financing for the buyer
Swiss banks generally grant more favourable financing conditions for the acquisition of an SA. The clear capital structure, audited accounts and formalised governance reduce perceived risk, thus facilitating the obtaining of acquisition loans at competitive rates.

Potentially higher valuation
The valuation multiples applied to SAs are often higher than for comparable Ltds, particularly thanks to increased liquidity and attractiveness to a wider range of acquirers. To explore valuation methods in depth, consult our guide on how to value your business in Switzerland.

Disadvantages and constraints

Despite its numerous advantages for succession, the SA also presents certain constraints that should be anticipated.

Minimum capital of CHF 100,000
The formation of an SA requires a minimum share capital of CHF 100,000, of which at least CHF 50,000 must be paid up. This requirement represents a significant initial investment, particularly when transforming from a sole proprietorship or an Ltd.

Heavier administrative formalities
The SA involves strict governance obligations: mandatory annual general meetings, formalised board of directors, detailed minutes and publication of accounts in certain cases. These administrative constraints require rigorous monitoring and can make daily management more cumbersome.

Higher formation and management costs
Formation costs (CHF 5,000 to 10,000) and annual management costs (mandatory audit above certain thresholds, fiduciary fees) are generally higher than those of an Ltd. These costs must be weighed against the tax advantages and valuation at sale.

Less control over shareholder identity
Except for restrictive statutory clauses (binding or approval clauses), shares in an SA can be freely transferred. If you wish to maintain strict control over shareholder identity during the growth phase, this freedom may be perceived as a disadvantage.

Conclusion: For a medium to long-term transfer (5-10 years), the advantages of the SA far outweigh its constraints, particularly if you are targeting an external sale or optimal valuation.

Ltd (limited liability company): control and flexibility

The Ltd represents an interesting compromise between the sole proprietorship and the SA. Particularly suited to family businesses and medium-sized SMEs, it offers a balance between asset protection, organisational flexibility and enhanced control over shareholder composition.

With approximately 30% of business transfers in Switzerland, the Ltd remains a relevant structure in specific sale contexts, particularly when control and family succession are priorities.

Advantages of the Ltd for sale

More accessible minimum capital
With a minimum share capital of only CHF 20,000 (fully paid up), the Ltd remains accessible to SMEs and facilitates transformations from a sole proprietorship without mobilising significant funds.

Enhanced control over buyers
One of the major assets of the Ltd sale lies in strict control over partner identity. Any transfer of company shares requires approval from the partners' meeting (unless otherwise provided in the articles). This mechanism allows filtering of buyers and ensures that only candidates validated by existing partners can enter the capital.

Flexibility in internal organisation
The Ltd offers great statutory flexibility: customised profit distribution, differentiated voting rights, tailored approval clauses. This flexibility allows fine-tuning of the structure to the specific needs of the transfer, particularly in complex family contexts.

Lower management costs than the SA
The administrative and accounting obligations of an Ltd are generally less onerous than those of an SA. Audit is only mandatory in certain specific cases, which reduces annual management costs. Transformation costs from a sole proprietorship are also more modest (CHF 3,000 to 7,000).

Suited to family businesses wishing to maintain control
For family or internal transfers, the Ltd often constitutes the best choice. It allows transferring the business to the next generation whilst maintaining strict control over the entry of third parties into the capital, thus preserving the family character of the business.

Perception of proximity and authenticity
In certain sectors (crafts, local commerce, local services), the Ltd can convey a more approachable and accessible image than an SA, which can constitute a commercial asset and facilitate customer continuity during the transfer.

Disadvantages for succession

Whilst the Ltd presents undeniable advantages for certain types of transfers, it also involves significant constraints that can complicate or slow down the sale.

More complex transfer: mandatory authentic notarial deed
Unlike the SA where share transfer can be relatively simple, any transfer of Ltd company shares necessarily requires an authentic deed drawn up by a notary. This formality generates additional costs (generally CHF 1,500 to 3,000) and lengthens transaction timescales.

Restrictive clauses can block or slow down the sale
Approval and pre-emption clauses, whilst protecting existing partners, can become obstacles during an external sale. A minority partner can potentially block or delay a transaction, creating blockage situations detrimental to valuation.

Less attractive to external buyers and investors
Institutional investors and acquisition funds overwhelmingly favour SAs for their liquidity and simplicity of transfer. An Ltd can therefore significantly reduce the pool of potential buyers, limiting competition and potentially the final valuation.

Potentially less advantageous taxation depending on canton
Whilst structure taxation varies greatly by canton, Ltds generally benefit from fewer tax advantages than SAs upon sale, particularly concerning partial exemption on capital gains. In certain cantons, the tax difference can represent several tens of thousands of francs on an average transaction.

Bank financing sometimes more difficult to obtain for the buyer
Banks may be more cautious in financing Ltd acquisitions, particularly due to lower liquidity and restrictive clauses. Credit conditions (rates, guarantees required) may be less favourable than for the acquisition of a comparable SA.

Sometimes perceived as less professional
In certain sectors (technology, industry, B2B services), the Ltd may be perceived as a less mature or professional structure than an SA, which can negatively affect the perception of the company by potential buyers.

Conclusion: The Ltd remains relevant for family or internal transfers, but often represents a handicap for external sales. In the latter case, a transformation from Ltd to SA deserves serious consideration 5 to 10 years before the planned sale.

Sole proprietorship: the least favourable structure for succession

The sole proprietorship (or individual enterprise) is the simplest legal form for starting an activity, but it proves to be the least suited to business succession. If you currently operate your activity under this form and are considering a sale in the medium term, transformation into an SA or Ltd becomes a strategic priority.

Impossibility of directly selling the structure
The fundamental problem of sole proprietorship sale lies in its intrinsically personal character: the business and the entrepreneur are legally one. It is therefore impossible to sell the business as such. Only assets (equipment, stock, clientele, goodwill) can be transferred individually, which considerably complicates the transaction.

Unfavourable taxation: full taxation of gains as income
When selling assets of a sole proprietorship, the gains realised are fully taxed as ordinary income, at the seller's marginal tax rate. This taxation can represent a burden of 30% to 45% depending on the canton and overall income, with no possibility of partial exemption as for an SA. The tax impact can thus reduce the net proceeds of the sale by several tens of thousands of francs.

No legal continuity of the business
The sale of a sole proprietorship does not allow transfer of the legal entity itself. The buyer must create their own structure and individually transfer each asset, contract and authorisation. This absence of legal continuity considerably complicates the transaction and generates significant administrative costs.

Potential loss of clientele and contracts during transfer
Without legal continuity, all contracts (suppliers, customers, leases, authorisations) must be renegotiated or transferred individually. This rupture generates a high risk of customer loss and can compromise the value of the transfer. Certain strategic contracts may even be lost if counterparties refuse the transfer.

Significantly lower valuation
Due to all these disadvantages, a sole proprietorship is generally valued 20% to 40% less than an equivalent SA or Ltd. Buyers factor into their offer the risks, administrative costs and complications related to the structure.

Strong recommendation: transform into SA or Ltd several years before the planned sale
If you operate a sole proprietorship and are considering a transfer in the next 5 to 10 years, transformation into an SA or Ltd becomes imperative. This transformation allows you to:

• Benefit from significantly more advantageous taxation upon sale

• Considerably facilitate the transfer process

• Significantly increase the company's valuation

• Broaden the pool of potential buyers

• Build up an accounting and legal track record in the new structure

Transformation costs (CHF 2,000 to 5,000) are largely offset by tax savings and increased valuation. To avoid common mistakes when preparing your sale, consult our article on the 7 most common mistakes when selling an SME.

Unequivocal verdict: The sole proprietorship must imperatively be transformed well before any planned sale. Postponing this transformation means forgoing tens of thousands of francs and compromising the success of your transfer.

Structure transformation: anticipate 5 to 10 years before sale

One of the most strategic decisions in preparing a business succession concerns the timing of legal structure transformation. Contrary to popular belief, transforming your sole proprietorship or Ltd into an SA just before sale is rarely optimal. Anticipation of 5 to 10 years constitutes the key to successful tax and operational optimisation.

The tax advantages of anticipation

Tax optimisation: avoiding double taxation
Transforming your legal structure often generates a first tax charge related to the transfer of assets from the old to the new entity. If this transformation occurs just before the sale, you risk double taxation: first on the transformation, then on the sale itself. By anticipating 5 to 10 years, you spread these tax charges and may even benefit from exemption provisions depending on the canton.

Spreading the tax burden over time
An anticipated transformation allows distributing the tax impact over several accounting periods, thus avoiding taxation peaks that can significantly burden your marginal rate. This strategy can generate savings of CHF 20,000 to 100,000 depending on the company's size and canton of establishment.

Benefiting from the tax advantages of the new structure
Once transformed into an SA, your company can immediately benefit from the tax advantages specific to this legal form: partial exemption on capital gains upon future sale, optimisation of dividend/salary remuneration, tax deductibility of certain charges. The earlier the transformation occurs, the more these advantages accumulate over time.

Building up a track record in the new legal form
Buyers and their financial advisers attach great importance to the accounting and legal track record of the company in its current form. An SA established for 7-8 years inspires significantly more confidence than an SA created a few months before being put up for sale. This track record facilitates valuation, reassures banks for financing and can increase valuation by 10% to 15%.

Anticipating regulatory changes
The tax and regulatory framework is constantly evolving. By transforming your structure well in advance, you protect yourself against potential future tax tightening and benefit from current conditions, often more favourable.

Concrete example: An industrial SME operated as a sole proprietorship, transformed into an SA 7 years before sale, was able to optimise its taxation to the tune of CHF 85,000 (spreading of transformation charge + partial exemption upon sale), whilst increasing its valuation by 12% thanks to the increased attractiveness of the SA structure.

When and how to transform your structure?

Ideal timing: 5 to 10 years before the planned sale
The optimal timing for a structure transformation lies between 5 and 10 years before the planned sale. This timeframe allows you to:

• Fiscally amortise transformation costs

• Build up a credible track record in the new legal form

• Progressively optimise capital structure and governance

• Fully benefit from the tax advantages of the new structure

• Reassure potential buyers about legal stability

If you are considering a transfer in less than 3 years, a transformation often remains beneficial, but the gains will be less optimal. Beyond 10 years, the marginal benefit diminishes, even if the transformation remains relevant for other strategic reasons.

Transformation process: administrative steps
The transformation of a sole proprietorship or Ltd into an SA follows a structured process:

1. Preliminary audit: Assessment of current legal, tax and accounting situation

2. Drafting of articles: Definition of capital structure, voting rights and governance

3. Asset valuation: Valuation of transferred assets (often by an independent expert)

4. Transformation deed: Appearance before notary for authentication

5. Registration in the Commercial Register: Registration formalities for the new structure

6. Administrative transfers: Adaptation of contracts, authorisations and insurance

Transformation costs
Costs vary according to the complexity of the structure and the size of the company:

• Sole proprietorship → Ltd: CHF 2,000 - 5,000

• Sole proprietorship → SA: CHF 4,000 - 8,000

• Ltd → SA: CHF 5,000 - 10,000

These costs generally include notarial fees, Commercial Register registration fees, fiduciary fees and basic legal advice. For complex structures, costs may be higher.

Transformation timeframes
The complete transformation process generally requires 2 to 4 months depending on the complexity of the structure, the availability of stakeholders (notary, fiduciary) and cantonal specificities. It is therefore crucial to anticipate these timeframes in your strategic planning.

Importance of being accompanied by experts
Legal structure transformation is a complex operation with major tax, legal and operational implications. It is essential to be accompanied by specialised professionals:

• Specialised fiduciary: For tax and accounting optimisation

• Lawyer specialised in company law: For drafting articles and legal security

• Valuation expert: For valuation of transferred assets

• Business succession adviser: For the overall strategy of preparation for sale

Leez connects you with a network of qualified experts specialised in business succession in Switzerland. Discover our network of expert partners to support you in your structure transformation.

Crucial point: Never consider structure transformation as a simple administrative formality. It is a major strategic decision that can gain or lose tens of thousands of francs during your future transfer. Investment in expert support always pays for itself.

Selection criteria: SA or Ltd for your succession?

Now that you know the advantages and disadvantages of each legal form, how do you concretely choose between SA and Ltd to optimise your future transfer? Here is a decision guide based on objective criteria and your specific situation.

Choose the SA if...

You are targeting a sale to an external buyer or investor
If your succession strategy favours an external sale (sale to a third party, to a competitor, to an investment fund), the SA stands out as the optimal choice. Its capital structure and free transferability of shares considerably facilitate this type of transaction.

You wish to maximise attractiveness and valuation
To attract the maximum number of potential buyers and optimise valuation, the SA Switzerland transfer offers a decisive advantage. The valuation multiples applied to SAs are generally 10% to 20% higher than comparable Ltds, thanks to increased liquidity and attractiveness to investors.

Your company has significant growth potential
If your SME presents strong development potential, the SA facilitates fundraising, entry of investors into the capital and external growth operations. This structure better supports growth ambitions and values this potential upon sale.

You are planning a transfer in 5-10 years and can invest in the transformation
Timing is crucial: if you have a 5 to 10-year horizon before sale, you can fully benefit from the tax advantages of transformation and build up a solid track record in the new structure. The initial investment (CHF 5,000 to 10,000) will be largely offset by tax savings and increased valuation.

You want to facilitate financing for the buyer
Swiss banks generally grant more favourable financing conditions for the acquisition of an SA. If you wish to facilitate the takeover and broaden the pool of potential buyers (including those requiring bank financing), the SA constitutes a major asset.

Your sector of activity values the SA structure
In certain sectors (technology, industry, B2B services, health), the SA conveys an image of professionalism and maturity that can positively influence the valuation and attractiveness of your company.

Typical case: Industrial SME with 15 employees, EBITDA of CHF 500,000, 58-year-old manager wishing to transfer in 7 years to an external buyer. Recommendation: immediate transformation into SA to fiscally optimise the future sale and maximise attractiveness. To understand how to precisely value your company, consult our guide on valuation methods in Switzerland.

Choose the Ltd if...

You favour a family or internal succession
If your objective is to transfer the business to your children, a family member or a key employee, the Ltd offers the necessary control and flexibility. Approval clauses allow filtering of buyers and guarantee a transfer in line with your values and company culture.

You wish to maintain control over the buyer's identity
The statutory clauses of the Ltd sale allow strict control over the entry of new partners. If you wish to ensure that only a buyer validated by you (or by existing partners) can buy the business, the Ltd offers this protection.

Your company is of more modest size
For SMEs of modest size (fewer than 10 employees, turnover below CHF 2 million), the Ltd may suffice, particularly if the transfer remains within a family or local circle. Lower management costs then constitute an appreciable advantage.

You want to limit management and transformation costs
If your priority is to minimise costs (transformation, audit, annual management), the Ltd represents a more economical option than the SA, with lighter administrative obligations and generally lower fiduciary fees.

The transfer is planned for the short term (less than 3 years)
If you are considering a transfer in less than 3 years and the buyer is already identified (family or internal transfer), a transformation into SA will not bring significant benefit. The Ltd can then remain relevant, provided the buyer accepts this structure.

Your sector values proximity and authenticity
In certain sectors (crafts, local commerce, local services), the Ltd can convey an image of proximity and authenticity appreciated by clientele. This perception can constitute an asset for business continuity after transfer.

Typical case: Family business with 8 employees, transfer planned to son in 2 years, desire to maintain family character. Recommendation: retain Ltd structure with adaptation of articles to facilitate internal transfer.

Point of attention: Even in these cases, if you are considering significant growth or a possible external sale in the medium term, transformation into SA deserves serious consideration. The question is not only "is SA or Ltd better for selling" today, but which structure will optimise your transfer in 5 to 10 years.

Case studies: examples of successful transfers

To concretely illustrate the impact of legal structure choice on the success of a transfer, here are three anonymised case studies of Swiss companies that optimised (or not) their legal form before sale.

Case 1: Industrial SME transformed from Ltd to SA 7 years before sale

Profile: Mechanical component manufacturing company, 22 employees, turnover CHF 4.5 million, EBITDA CHF 650,000.

Initial situation: Operated as Ltd for 15 years, manager (60 years old) anticipates retirement at 67.

Action: Transformation into SA 7 years before planned sale, investment of CHF 8,500 for transformation.

Results:

• Estimated tax saving upon sale: CHF 95,000 thanks to partial exemption on capital gains

• Valuation increased by 15% thanks to increased attractiveness to industrial buyers

• Facilitated sale process: 4 qualified buyers in competition, transaction finalised in 8 months

• Bank financing easily obtained by buyer thanks to SA structure

Key lesson: The 7-year anticipation allowed building up a solid SA track record, reassuring buyers and fiscally optimising the transaction. The return on investment of the transformation was more than 10:1.

Case 2: Family business remained as Ltd for controlled internal succession

Profile: Specialised retail business, 6 employees, turnover CHF 1.2 million, EBITDA CHF 180,000.

Initial situation: Family business as Ltd, transfer planned to manager's daughter, already active in the business for 5 years.

Action: Retention of Ltd structure with adaptation of articles to facilitate progressive internal transfer (sale in tranches over 3 years).

Results:

• Successful transfer with maintenance of family character of the business

• Limited transfer costs: CHF 3,500 (notarial deed + statutory adaptations)

• Perfect business continuity, no customer loss

• Optimised taxation thanks to progressive transfer over 3 years

Key lesson: For an internal family transfer with identified and involved buyer, the Ltd remains relevant and allows limiting costs whilst retaining family control.

Case 3: Sole proprietorship transformed into SA 5 years before sale - significant valuation difference

Profile: Engineering office, 4 employees, turnover CHF 800,000, net profit CHF 150,000.

Initial situation: Operated as sole proprietorship for 12 years, manager (55 years old) considering sale in 5-6 years.

Action: Transformation into SA 5 years before planned sale, investment of CHF 6,000 for transformation.

Results:

• Valuation multiplied by 1.8x compared to a sole proprietorship (from estimated CHF 300,000 to actual CHF 540,000)

• Tax saving upon sale: CHF 68,000 (partial taxation vs full taxation as income)

• Increased attractiveness: 7 interested buyers vs 2-3 estimated as sole proprietorship

• Total legal continuity: all customer and supplier contracts transferred without renegotiation

Key lesson: The transformation of a sole proprietorship into SA is probably the most profitable optimisation for a future transfer. The overall gain (valuation + taxation) can represent 40% to 60% additional value compared to a sale as sole proprietorship.

Summary of lessons:

• Anticipation of 5 to 10 years is a key success factor for optimising structure

• Transformation into SA generates the most significant gains for external sales

• The Ltd remains relevant for internal family transfers

• Investment in transformation is always repaid several times over upon sale

Mistakes to avoid when choosing structure

After analysing the advantages of each legal form and optimisation strategies, here are the most common mistakes made by sellers concerning legal structure choice, and how to avoid them.

Mistake No. 1: Not anticipating - transforming too late or at the time of sale
This is the most costly mistake. Transforming your legal structure a few months before putting it up for sale generates several problems: risk of double taxation, absence of track record in the new structure, negative perception by buyers ("why this last-minute transformation?"). Solution: Plan your transformation 5 to 10 years before the planned sale, even if the exact date remains uncertain.

Mistake No. 2: Neglecting the tax impact of transformation
Some sellers focus solely on the immediate transformation costs (CHF 5,000 to 10,000) without analysing future tax savings upon sale (often CHF 50,000 to 150,000). This short-term vision loses tens of thousands of francs. Solution: Have a comparative tax simulation carried out by your fiduciary to precisely quantify the impact of each structure.

Mistake No. 3: Choosing solely based on current costs without long-term vision
Favouring an Ltd or sole proprietorship solely to save a few thousand francs in annual management fees means compromising an optimal transfer that could generate several hundred thousand francs of additional value. Solution: Adopt a strategic 10-year vision and integrate succession into your thinking from now on.

Mistake No. 4: Not consulting experts specialised in succession
The choice of legal structure has complex tax, legal and strategic implications. Relying solely on your general accountant or informal advice exposes you to costly mistakes. Solution: Consult experts specialised in business succession: specialised fiduciaries, company law lawyers, succession advisers. Leez connects you with a network of qualified experts to support you.

Mistake No. 5: Underestimating the impact of legal form on valuation
Many sellers think that only economic performance determines valuation. In reality, legal structure can vary valuation by 10% to 30% at equal economic performance. An unattractive sole proprietorship or Ltd can significantly reduce the sale price. Solution: Integrate legal structure as a valuation lever in its own right in your preparation strategy for sale.

Mistake No. 6: Transforming without adapting governance and articles
Transforming into SA without properly structuring governance (board of directors, audit body, adapted articles) can create complications during due diligence. Solution: Take advantage of the transformation to professionalise your governance and draft articles adapted to a future sale.

Mistake No. 7: Ignoring cantonal specificities
Taxation and transformation formalities vary significantly from one canton to another. An optimal strategy in Geneva may be sub-optimal in Zurich. Solution: Have your specific situation analysed taking into account the particularities of your canton of establishment.

To discover other common mistakes when selling an SME, consult our detailed article on the 7 most common mistakes when selling an SME.

Guiding principle: The choice of legal structure is never a simple administrative formality. It is a major strategic decision that directly impacts the value, taxation and success of your transfer. Treat it as such by surrounding yourself with the right experts and anticipating sufficiently.