Transferring a General Contractor License

April 29, 2023

by a searcher from Harvard University - Harvard Business School in Alexandria, VA, USA

I'm under LOI for a commercial landscaping business in Virginia that does some construction work. The owner is the only one who holds the Class A General Contractor license. The requirement to obtain the certification in Virginia is 5 years experience. The owner is willing to hold the license through the sale, but 5 years would be too long to wait before I could get it. Has anyone dealt with something similar and figured out a creative solution besides hiring someone else with the cert?

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

Some of it will depend on what type of financing you are seeking on the deal, but any lender is going to want to be sure you have the proper licensing. If you are doing SBA financing, you cannot utilize the seller because of the current restrictions in place (which might be changing this week). Most people will find a key employee that has the license and sign them to an employment agreement (but it sounds like that might not be an option in this case) and will bring in another team member that carries the license as part of the acquiring team. More than likely most lenders are going to want that person on the hook in some way via an employment agreement or even potentially a limited guarantee to ensure there is an incentive to keep that license in place. Just some initial thoughts. Happy to discuss at redacted

Reply by a searcher
from North Carolina State University in Sykesville, MD 21784, USA

I am really close to being under LOI with a Virginia business that also holds a Class A license. I research the requirements and while there are a few tests you need to take and some prep classes available for those tests, you can, as others said, have a key employee on the license as the qualifier. The business gets the license, but you must have a qualifier with 5 years experience in the industry.

My plan and what we have all but agreed to is to have the seller be the qualifier, until I can obtain my license. In my case, the seller is financing the entire deal so no bank requirements, and thus makes it easier. The seller is very willing to do this and the proposed note is 5 years long so he has an incentive to help.

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