How are non-licensed business buyers getting around licensing requirements?

March 15, 2024

by a searcher from Biola University in North Tustin, CA, USA

Self-funded searcher in Cali looking to acquire a business in the residential and commercial services space. Cali requires CSLB licenses for just about everything. How are others dealing with the licensing requirements (assuming don’t already have a license)?

SBA allow sellers (presumably with license) to stay involved for 12-months max, then buyer has to get licensing themselves. Options I can tell are, 1) pull up internal employee (with license or can sit for one) to RMO, 2) majority buyout leaving seller with equity to act as RMO, 3) partner with licensed RMO.

Any other ideas?

Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

Great question. If you are doing SBA financing what we find that most buyers are doing right now is the partial business acquisition where they keep the seller involved for less than a 20% ownership interest (so they do not have the guarantee the loan) and keep the license via the seller. The other option is to promote a key employee that carries the license or give them a minority equity interest in the deal as well. Ultimately you need to find a permanent solution for maintaining the license. I hope this helps. If you have additional questions you can reach me at redacted Good luck.

Reply by a searcher
from University of Southern California in 1 World Way, Los Angeles, CA 90045, USA

Echo Brad's comments. If you have a college degree and some experience (for example I was in real estate) realistically you can get most licenses in around years time

Join the discussion