By Shauna Krause, President, Capitol Services, Inc.
Time to relax? With the Boomers reaching the age when many including contractors want to retire, keeping the business in the family or selling become priorities. Whether it’s a legacy for family or a sale to others there are rules to know ahead of time!
Our landscape business, which had been very slow the past two years, is picking up now. We are thinking of re-tooling for a final push to sell it before I retire... that is the nature of my inquiry.
Can I change the name of a Corporate license? I think having my name as the business name may limit our possibilities to expand and ultimately sell the whole business to a non-family member. My boys are in completely different fields and really don't want to carry on with this business. Or perhaps we do a DBA with a different name? Got any ideas? Thanks.
A: Nice to hear that things are going well. Have you decided how you're going to sell the business -- asset or stock sale? If an asset sale, the buyer will likely set up their own corporation; purchase the assets and continue operating as you have been doing for years. The buyer may want to keep your existing name or change it. Either way, it should not matter what official name you're using at the time of sale.
With a stock sale, again, the buyer can continue using your existing business name or amend it. You certainly could add a dba, however, I’m not sure it would make a big difference since the buyer will be looking at your profitability and other financial considerations. They may even want to maintain the existing name because it is known in the community.
We recommend that you contact a professional business broker or your legal counsel. Discuss these questions with him/ her, including the issue of the business name. We can give you a few referrals in your area if you like. Again, thank you for your email. Good luck as you move forward with the sale.
Q: I’ve heard of family businesses where a son inherits his father’s contractor’s license when the father retires. Would this apply for a son-in-law as well? I wasn’t sure if the different last name would raise a red flag. Would he be required to take the exams?
A: Yes, in the eyes of the Contractors State License Board, a son-in-law is considered an immediate family member. If your son-in-law has been an employee and actively engaged in your business for at least five years out of the previous seven, then he can request to take over your Sole Owner license and Waive the exams.
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 firstname.lastname@example.org, or write us at Capitol Services, Inc., 1225 8th St. Ste. 500, Sacramento, CA 95814. Research past columns at www.cutredtape.com.