Buying a Business that Requires Contractor's License (C36) in California

by a searcher from University of California, Los Angeles

10 months ago

I've seen plenty of plumbing businesses go up for sale, but they all require a C36 license. In California, it takes 4 years of journeyman-level experience to obtain the C36 license (as with most contractor's licenses), but the SBA only allows an RMO for###-###-#### years.

Are there any ways around this? Would I, as the majority owner/operator, require a C36 license, or can I have someone with a minority ownership (<1%) cover this state requirement?

2 likes
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4 comments

searcher from Keller Graduate School of Management of DeVry University

Back when I purchased my flooring business###-###-#### The main installer had the license. I eventually became the RMO for the license. You can get a responsible employee to take the test. its not a difficult test. Then in 4 years you can take the test. if you have a board of directors (industry expert member) could serve in that capacity for the time being.

10 months ago | like reply | 1 like

professional from University of Notre Dame

I've done a handful of these deals in CA that require a contractor's license - I'll echo a lot of what Brad said. It takes creative deal structuring and typically a requirement of the Seller to stay on in some form or fashion (either as the RMO, which requires a bond if they don't retain 20+% ownership, or an RME). Rollover equity/partial business acquisition can incentivize the Seller to do that. It's also very important whether the Seller holds the license personally or the LLC is the license holder b/c licenses may get cancelled upon a change of control. Happy to chat more about it - DM me or shoot me an email --@----.com

8 months ago | like reply | 1 like

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