Has anyone bought an HVAC/Plumbing company without personally holding the license?

February 25, 2026

by a searcher from Missouri Western State University - Steven L. Craig School of Business in Kansas City, MO, USA

I understand that in many jurisdictions you need a properly licensed individual to pull permits and legally operate. With the skilled labor shortage and many master-level tradespeople nearing retirement, I’m curious how buyers are structuring these acquisitions. Specifically: Are you hiring and retaining a licensed master as a W-2 employee? Structuring equity partnerships? Using another structure I’m not thinking of? I’d appreciate insight into: What lenders (especially SBA) required - I know you cant keep the owner on for use of license more then a year on SBA correct? How you mitigated license-holder risk Retention strategies that actually worked Pitfalls to avoid Thanks in advance for any firsthand experience or lessons learned.

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Reply by a lender
from Cornell University in Los Angeles, CA, USA

Hi ^redacted‌ - nice to meet you. This comes up all the time in home services deals. In a large commercial electrical contractor deal we funded, we advised the buyer to get an existing employee with the license on a multi-year employment agreement with retention bonuses. That satisfied lender concerns and we got the deal done. Generally speaking, your options are: 1. Get an existing employee with the license to sign a multi-year employment agreement with retention bonuses. 2. Find a new employee with the license and sign a similar agreement. 3. Get a business partner with the license, give them below 20% equity so they don't guarantee. On your main question about keeping the seller on for their license: You can structure it as a partial buyout where the seller retains some equity and stays on. But under the current SBA rules (SOP###-###-#### , effective June 1, 2025), any seller who retains even 1% equity must personally guarantee the full loan for a minimum of two years. After two years you can get that guarantee removed. If they hold 20% or more, the guarantee lasts the entire life of the loan. That spooks most sellers. This is why options 1 through 3 tend to be the cleanest path. They keep the licensing issue solved without forcing the seller to stay on the hook. We have a lot experience financing home services companies via the SBA. If you ever need help reviewing a deal, I am happy to help. We work with all the major SBA lenders. The bank pay us after your loan closes, so this is a 100% free service for you. You can email me directly at redacted or schedule a meeting with me: https://cal.com/francodeguzman/30min. Look forward to chatting!

Reply by an investor
from New York University in New York, NY, USA

Hi Aaron - I recently committed on a deal - hopefully closing next month - that has fairly similar dynamics in terms of license requirements. One solution the searcher has implemented is fairly common - giving 1% to a licensed employee and coming to some kind of employment agreement as a condition precedent to closing. However, the searcher also has a very interesting backup plan given I naturally asked “What happens if that employee quits?” As part of the searcher’s diligence, he networked with multiple industry operators in that same state, and at least one of them will be investing in the deal. Obviously this was extremely helpful for the diligence process, and it’s a great backup plan. I can’t share much more but feel free to DM if you want to discuss.

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