I'm currently reviewing a deal in the government procurement and project management sector in the U.S., which holds Multiple Award Schedule (MAS) contracts through the General Services Administration (GSA). The deal is likely to be structured as a stock sale. I'm aware of the need to register with the System for Award Management (SAM) to continue bidding on GSA contracts post-acquisition.

The business has Veteran-Owned Small Business (VOSB) status, which I wouldn't qualify for, but fortunately, less than 5% of the revenue comes from Veteran set-asides. The majority of the revenue (>50%) is from small business set-asides, which the business will continue to qualify for. We aren't worried about the revenue, but need more info about the impact of a status change.

The current owner asserts that in a stock sale, the GSA contracts and schedule status will remain with the business. However, I understand that this might not be guaranteed. According to the GSA, while novation might not always be necessary in a stock sale since the legal entity remains unchanged, the GSA contracting officer must still be notified of the ownership change. They will then determine if a novation is required, which would involve a formal process with legal agreements between the seller, buyer, and the government.

The sellers are willing to cooperate with the transition, and a minority owner is open to staying on for 1-2 years if needed. Given the potential risk of needing a novation and the associated downtime, we are considering not purchasing the accounts receivable and ensuring we have sufficient working capital for some transition downtime.

Is there anyone with direct experience in this space who would be willing to consult with me? Your insights would be greatly appreciated.