How to handle expert/professsional license requirements?

I'm a little late answering but want to reiterate that this varies significantly by state and the licensing issue can be much bigger than you originally think. I was in-house counsel in the construction industry for 6 years and none of that experience counts toward the license in most states, if I answer the application honestly, because it is not field experience.. Some states, such as Arizona, can be especially hard because some contractors licenses require 4 years of experience, which is a very long time for a seller to stick around. I could not find an SBA lender who was willing to bet on the seller agreeing to stick it out under any of the methods mentioned above, even keeping the seller on as a minority owner, because 4 years was too long. I would have had to find a partner who had a license and my experience is that if the license holder was a desirable partner he or she likely already had their own company. The reason for this is that in Arizona, although the license is obtained by an individual, it is tied to a company. Therefore, there is no need for multiple people in the company to concurrently hold a license. I looked at several companies that had a manager who would have been willing to sit for the exams and hold the license, but it was still a risk because of the 4 year time frame. I found a guy who had retired but had kept his license active who was willing to come on for a small amount of equity, but his level of involvement was likely not going to be sufficient to meet the letter of the law because it was clear he wanted to spend his time travelling with his wife. I looked at two deals in which I would have bought out one of two partners, but I would have owned 51%,, which made the deal mechanics very different from the traditional search model. Another reason that it can be hard is that some insurance providers will require that the majority owner hold the license, and you cannot operate without insurance. Again, I'm not saying that every state is the same as Arizona, but they can be tricky.

Cliff, this is a sticky issue that is very difficult to paper. You can make them stay on as the holder of the license, but if in an industry where they have to pull the permits or sign off on the work product - this is hard to force someone who is the SME to do something they know (or may consider) as not good enough to "put their name on". Make sure you have several people in mind and know understand what the process / sticking points would be to change the person on the license. Consider certain industries already have a work around in place. Just as an example, certain industries in medicine (med spas, IV infusions, NEMT, veterinarians, etc...) have hired guns that are your professional service. I am not at all stating that they just sign off on anything, but because of their experience, they can explain situations and they have experience to know what workflow processes are cost effective and standard in the industry. Their expertise and willingness to be a part of your success isn't personal but rather business relationship which can mitigate personal issues if things become tough in a deal or transition. It takes that element out for the most part.