Do I need to move for an out of state acquisition?

August 04, 2022

by a searcher from Northwestern University - Kellogg School of Management in Fort Lauderdale, FL, USA

I am looking at home services companies in a state where I do not live. I do not plan to move my family. Instead, I have very capable general manager [think partnered search] who will be onsite and will run the day to day operations. I will work on back office, digitization and other sales growth efforts. He will receive equity at close and more will vest over time with performance. I plan to spend a lot of time onsite for the first 6-12 months, and shift more remote as progress allows. I'm curious how SBA lenders and investors might react to such a plan. Is this a big issue or a small one in your eyes? What questions or concerns should I expect?

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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

As a general matter SBA lenders and really all lenders like the owners to move where the business is. However, there are always exceptions to that rule. If the business is largely remote to begin with, them being onsite might not be as important. If you have a partner that will be moving to the site, even if a limited partner, it also is not as important. So long as there is someone onsite with ownership, the lender is not going to be as worried about it. Some lenders will always want the primary owner close, but just because you do not intend to move your family right away, there is nothing that would prevent you from moving in the future. The key is to presenting a strong and concise management plan to the SBA lender, and you should not have any issues. We can help you put that together if you need any assistance. We have done plenty of deals where the owner has not planned to move as the owner is not taking an active role. For more questions I can be reached at redacted

Reply by an intermediary
from University of Texas at Austin in Austin, TX, USA

Assuming all other factors for SBA lending are met, the particular lender's appetite for the business sector, the resume and background of the GM, and your own experience in managing remotely, and in the industry will be critical to this decision.. I think it also depends a bit on how the business(es) you are buying are operating currently.

Beyond lending, there may also be considerations for tax and more that you should discuss specifically with your CPA / tax planner / advisor for both your business and for your income.

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