TRADE BUSINESSES AND STATE LICENSING COMPLIANCE

The trade industries (electrical, HVAC, etc) are a common acquisition target for searchers and one of the major challenges is that the searcher is not licensed in that field. The common approach seems to be to have a key employee hold the state license and that is clearly a risk point since the business is dependent upon that employee's continuing to stay with the company and be healthy. 
What have people done before to manage this risk? I personally have thought about negotiating employment contracts with the license holder such that they get a large bonus after X number of years. What if the licensed employee has a personal or family health crisis that forces them to leave the company? How easy is it to have a backup employee with the license or to backfill the role?

If I pursue one of these businesses it may take a number of years before I personally can hold the license and want to know how to manage the risk when evaluating trade businesses for an acquisition. Thank you ahead of time for your input.



share: