Dear Editors, Please accept my greatest appreciation in your timely responses to the inquiry on use of the Capitol Connection, and I look forward to hearing from you anytime we can be of service. If you have not responded please take a moment to do so as we want to have the widest reach in crafting this as a resource in continuing the Capitol Connection. Best regards, Rick Reed 916-704-0080
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by Shauna Krause, President, Capitol Services, Inc.
Lots of hoops to jump thru in becoming a licensed contractor. Worthy hoops that lead to standards, opportunity and safety for all contractors and consumers. Having an expert ‘coach’ is also of great benefit in getting that win. Now let’s talk about what hurdles may be ahead in buying or selling a contracting business. As you will see like comedy ‘timing’ is everything!...
Q: I am in the process of buying a contracting business. Part of the lender’s requirements is that I have the license in the name of my business to fund the sale and close the deal. Also, the seller doesn’t want to give up their license (for obvious reasons) until the deal closes. How do I ensure the license will be in hand in my business name on the day the deal is planning to close? It seems there is no way to get a license that quickly so how do people in these situations make it work? Will the CSLB expedite the processing of a new license if there is proof of a sale pending?
A: Unfortunately, there is no way to ensure the license will be in hand on the day a deal closes, however we can be of some assistance. In these situations, we have a way of submitting what I call a “mock” application that will help with taking into account the CSLB’s processing times and will allow you to have a better idea of when the license will be issued. If we start the process well in advance of the deal closing, we can even “play” with the timing a bit and have it all happen as close as possible to the closing date. And if the deal falls through for some reason, with the way we handle these, there is no harm done. As far as expediting, the CSLB reviews expedites on a case-by-case basis. From our experience, a pending sale of a contracting business is not a reason the CSLB usually will approve an expedite request, but we can always make an attempt.
Q: I am selling my contracting business which is licensed as a corporation. The buyer is planning to form a Limited Liability Company (LLC) to buy the business. We are working with a Business Broker who has told us that the license “transfer” process is as simple as changing the name with the CSLB, however when I called the CSLB, they said that we cannot just do a name change when the Company is changing from a Corp to an LLC. The CSLB also explained that the license is only “transferrable” under certain circumstances. When I relayed all of this to the Broker, he said the CSLB’s explanation didn’t sound right, they are making it too difficult, and changing the name should be satisfactory. That’s when I knew we needed to get you involved! How do we proceed?
A: The CSLB is correct. The Corporate license will either need to be re-issued to the LLC (if the situation meets the requirements) or the LLC will need to obtain a new license. A name change is not satisfactory! The buyer will need to have the LLC registered with the Secretary of State, obtain new bonds for the LLC, and provide proof of insurance. And of course, as always, we can help with the process so feel free to give me a call, or have the buyer call, to discuss!
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While knowledge is power, knowing where to go for the answers is half the battle. Get expert assistance immediately when you call 866-443-0657, email info@cutredtape.com, or write us at Capitol Services, Inc., 3609 Bradshaw Rd, Ste H, #343, Sacramento, CA 95827. Search past columns at www.cutredtape.com.