CA Contractor Acquisitions — RMO/RME Retention

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by a searcher from University of California, Berkeley - Haas School of Business
in Los Angeles County, CA, USA

1mo ago

CA Contractor Acquisitions — RMO/RME Retention

Hey everyone — looking for some collective wisdom from those who’ve been in or around acquisitions of California-licensed contracting businesses. Background: I’m evaluating a target in California that holds a CSLB contractor’s license tied to a Responsible Managing Officer (RMO) or Responsible Managing Employee (RME). Two specific questions: 1. RMO/RME Retention or Recruiting What has your experience been navigating this? Specifically: - Did you successfully retain the existing qualifier post-close, and if so, what did that arrangement look like (equity roll, consulting agreement, employment contract, etc.)? - For those who had to recruit a new RMO/RME — how did you find qualified candidates, what did compensation look like, and how long did the process take? - Any gotchas with CSLB’s 90-day substitution window that caught you off guard? 2. Pre-LOI Lender Letters of Confidence Has anyone obtained a letter of confidence or similar comfort letter from an SBA or conventional lender before LOI that specifically addresses the licensing/qualifier issue as a condition of financing? I’m thinking about how to get ahead of this in diligence and signal to a seller that the deal is real. Appreciate any experience, war stories, or intros to searchers who’ve navigated this well. Thanks in advance.

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reply by a searcher 1mo ago
from University of Cincinnati in Long Beach, CA, USA

Thanks for the tag ^redacted‌ Andrew, In California there are companies who will help with the process, CSLB application and make introductions to qualified RMO / RME and compliance follow-up. Here are a few (I am not related to any of these but have spoken to each) 1) ConstructionRMO redacted 2) RMO Construction Agency redacted 3) RMO Agency redacted Fees vary but typically range around: **Contractor Finder’s Fee: $2,500 - $3,000 **CSLB Application Fee: $800 **Monthly Fee for the RMO / RME person $1,200 ~ $1,600 Good luck ----gw

reply by a searcher 1mo ago
from University of California, Los Angeles in Los Angeles, CA, USA

I qualified and was able to get my license prior to acquisition - but it’s not uncommon to pay a consulting fee to the prior owner to have them on the license for a period of time. With education waivers you should then be able to qualify for the license and take the exam after a year or two.