The Increase in Voluntary Business Exits: Insights from France Stratégie

Each year, 80,000 deletions from the Trade and Companies Register (RCS) – i.e. the removal of a company’s registration with the administration and therefore its legal existence – correspond to voluntary purposes of activity. Thus, of the 160,000 companies (excluding micro-enterprises) removed from the market by commercial court registries each year, half of them result from a voluntary cessation of activity. This is twice as many as exits following judicial liquidation (around 40,000 per year).

In terms of development, voluntary exits from recently active companies had only slightly decreased in 2020. In 2021 and 2022 they returned to the level before the pandemic in 2019, which itself was higher than in 2021 and 2022. previous ones. “The fear that support for businesses during the pandemic has prevented the exit of low-productivity businesses from the market is thus put into perspective” explain the authors of thestudy by France Stratégie Anne Epaulard and Loïc Lahellec*.

More small businesses are ceasing their activity

These voluntary exits are mainly “made by small companies whose productivity is low and close to that of failing companies. However, they are much less indebted than the latter.” Good news therefore, the risk of very productive companies ceasing their activity seems low in France. “This could have been the case if market failures – for example the difficulty of finding a buyer for a business leader wishing to retire – prevented the continued activity of productive companies” we can read in the study. Thus, for the authors, “market sorting is effective if it is the least productive companies that disappear. Some of the companies stop their activity following a collective procedure: they display lower productivity than the companies that remain.

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The most affected non-trade market services

The characteristics of these companies which voluntarily exit the market? They are on average the smallest (3.5 employees on average) and 90% of them have six employees or fewer. In terms of sector of activity, if companies in industrial sectors represent 10% of the companies in the sample, the voluntary deregistrations of these industrial companies only concern 6% of the total voluntary deregistrations. Likewise, while construction is over-represented in failures (32%), this is not the case in voluntary exits (20%). These are market services excluding commerce, transport/storage and accommodation/catering, which represent 32% of the sample and correspond to the largest share of voluntary outings (34%).

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*Note published in July 2023. Source: Data Info Greffe, INSEE FARE file which contains company accounting data, France Stratégie calculations, data on company deletions from the trade and companies register (RCS) and data from the Bodacc on business sales.

Charlotte de Saintignon