Roofing Business Asset Sale vs. Stock Purchase

December 11, 2024

by a searcher from Yale University - School of Management in Miami, FL, USA

Wondering if anyone with experience acquiring a roofing business can tell me what would happen to all of the open permits for ongoing or upcoming jobs if I were to acquire a business as an asset purchase? It would seem problematic to have to pull all new permits for a new entity, and it that sense, a stock purchase seems preferable. On the other hand, purchasing the stock, and a mountain of potential liability, has its own challenges.

I would love to hear what the best practices on structure for a roofing acquisition are, and what would await me on day 1 if I wanted to purchase the assets. Thanks.

Reply by a searcher
from Harvard University in Palm Beach, FL, USA

Depends on the state. In Florida, you can have the license holder qualify your business with Department Of Business and Professional Regulation and then you can register the license holder to your business with the local county with their insurance requirements so you can pull future permits at a local level. You can also paper up the purchase agreement to ensure successful completion of the permitted work under seller's entity (and closure of said permit), but you need to capture all the WIP / % completion accounting accurately. This will get very tricky. They may ask that you be the responsible financial officer of the company and indemnify the license holder of any losses.

Reply by a searcher
from University of Notre Dame in Austin, TX, USA

Hi Jimmy, I have no experience with transferring open permits. But I would note that the downside of the liability would concern me more than the hassle of permitting. Also, in a stock purchase I'd be particularly attentive to potential sales tax liability--whether it has been remitted properly.

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