How to transition licenses for the trades

searcher profile

September 07, 2023

by a searcher from Columbia University - Columbia Business School in Washington, DC, USA

Hi all,

I'm working on a deal in Virginia that requires Class A licenses for both plumbing and electrical. VA requires you to have 5 years relevant experience to sit for the exam (I have zero).

Currently the seller has both licenses, but they are not transferrable under state law. Another employee also has them.

Any tips for how to transition the seller's licenses over to my NewCo?

Some options I've heard include seller consulting agreement, keeping the OldCo as a passthrough somehow, hiring a new person with the licenses, or just doing a stock deal. Would really appreciate any tips for getting this done with minimal risk.

Thanks!

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commentor profile
Reply by a searcher
from University of Tennessee in Nashville, TN, USA
Quick, abbreviated option list, from a non-attorney source:

1. Stock deal - You may need to strike a deal with the Seller to maintain a license on your behalf post-close if and only if the license is not intertwined personally to the Seller's individual license. NOTE: Understand the risks associated with a stock deal BEFORE seeking this path (aka pay for competent legal counsel).

2. Asset deal - Pay the Seller to be NewCo's licensee until you promote the other employee. Make sure that you offer is contingent on striking an employment agreement with the other employee and using that individual's licenses.

3. Asset deal - Pay the Seller to be NewCo's licensee until you hire someone else licensed to qualify.

4. Asset deal - Pay the Seller to be NewCo's licensee until you earn your license.

5. Asset deal - Pay the Seller to be NewCo's licensee until you merge or acquire another state-/local-based competitor and make that individual(s) the licensee(s).
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Reply by a searcher
from Washington State University in Spokane, WA, USA
If you're able to strike some kind of consulting agreement with a licensed individual, whether it's the seller or some third party, are there specific requirements on how involved this individual needs to be on a day-to-day basis?

For example, if you have other individuals licensed to do the day to day work but you don't want to have any of these individuals qualify as the required licensee due to the inherit risk that holds of them possibly leaving or bending you over a barrel, can you have a consultancy agreement with another licensee that is not part of the day-to-day?
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