In April 2025, we hosted a webinar in conjunction with Acquiring Minds. We discussed licensing and regulatory issues in acquisitions, what to look for, how to manage them, and how they can affect your deal.
Question Timestamps
- 07:07: What states do you have experience or expertise in when it comes to regulations and licensing? The person who asks happens to be in Texas—does it matter? Does it? How does that play out?
- 08:21: So really, you can help with transactions in any state where regulations and licensing apply across all 50?
- 08:51: Are you the right buyer for the business?
- 13:37: Can we assume, guys, that any kind of search or story or deal that you have going on that is a trades business—maybe not—where there’s some expertise like HVAC, plumbing, electrical (the big three), that this is the format where there’s a single person in that organization who has the license? Because the searcher is not going to get qualified for a license in those more specialized trades—it’s not something a searcher can go do. It takes years. So is it always the case that in any of these stories, an employee is the sole license holder?
- 26:38: Okay, how does a layperson or a searcher research license requirements? Is there a best practice here or a uniform answer, or is it the feared…?
- 28:48: You mentioned renting a license. If I buy a trades business, what would that look like?
- 31:51: Is it true—have you guys heard—that as of October 24, the SBA requires that the license holder be an owner of the business, as opposed to a consultant or employee? Do you know about the SBA requirements there, or no?
- 33:44: Can you guys give an example of a business license that is not transferable? We talked about transferability—any examples come to mind?
- 35:07: If using a stock sale to retain a license, would an F reorg still keep that license retained? And maybe define for everybody what an F reorg is, please?
- 36:51: Does the seller equity rollover to facilitate the license request still require the SBA PG, even if the seller’s rollover percentage is less than 20?
- 38:32: For one to five million dollar deals, what are the pros and cons of having an escrow versus offsetting the seller note for breaches of representations? So I guess this is not related—this is a general question: escrow versus offsetting. This is a forgivable seller note for breaches.
- 41:27: Escrow—in the pro column for escrow—is it can mean money back to you.
- 41:40: But couldn’t you make the same argument that forgiving a seller note—where you’re forgiving—is effectively money back to you? Because it’s reducing your debt burden every month. So the four grand I was going to have to pay the seller, I now no longer do. You know, it’s not an infusion of cash, but it’s more cash than I thought I was going to be working with, right?
- 43:27: Have you dealt with the mechanics of closing a transaction where the licenses were required to transfer to new ownership, but that transfer takes weeks or months to occur? For example, the state regulatory agency needs to approve it, but it’s bureaucracy—there’s a backlog, it takes forever. What are ways to ensure everybody’s operating in good faith? But it’s just mired in bureaucracy and you’re waiting on the government. What are the ways to mitigate those types of situations? (Plug for a future episode—one of my guests had such a situation in Atlanta, waiting on a GC license—had to wait nine or ten months as the Georgia State whatever regulatory body issued him his new license. It worked out, but it was incredibly anxiety-inducing for those months.)
- 47:39: More about that, because in the story I just referenced (which hasn’t been published yet), he also had worked with some sort of consultant. So I guess there are consultants who claim to be able to facilitate this—interfacing with the government to facilitate the licensing process. He also had such a firm or person who, of course, then reported back, “Oh my God, I’ve never seen anything like this. You know what Georgia’s doing here? This is unprecedented and horrible.” But anyway, so what is that? That’s not a lawyer—who are these consultants who do this?
- 49:59: What other mechanisms do you recommend to ensure continuity and maintenance of licensing in good standing until I, the buyer or searcher, can obtain my own license—which will take two years? So if it’s not note, if it’s not equity, the seller stays in the business as an employee. Is this just a renting situation where you juice the salary a little bit?
- 50:58: This one also feels like the seller—if you know, presumably you’re doing this deal because you don’t think the seller is shady and can be trusted—this seems like, you know, most sellers want to see their legacy continue. If it’s a good person, they want to see their legacy continue. They want to do right by their employees, especially if they’re going to be working in the business as well. So all of that should be even stronger in this case. I mean, maybe just make it clear to the seller—like, all of this whole thing falls apart if you walk.
- 54:03: Guys, I think this is a question just for how you work. Do you have a pre-LOI flat fee for reviewing an LOI or assisting in the crafting of one? I guess maybe use this as an opportunity to get a little bit more granular about how you work—the process, the milestones.
- 59:01: I’m reviewing a company that leverages licenses from OEMs—intellectual property for branded products that are then sold. These OEM licenses renew every two to three years, posing a risk that they get pulled before the loan is paid back. Any considerations on structure to mitigate this risk and align incentives?
If you need further assistance or are in the process of negotiating a letter of intent, contact us at info@barlowwilliams.law and we will be happy to discuss your situation.