Legal Blog

M & A Nuggets: Licenses and Permits

shutterstock_387084070If you are in the process of purchasing a business, make sure that you are aware of all licenses required to operate the seller’s business and that the seller has those licenses in force.  The seller’s licenses and permits are important for two reasons.  First, you need to understand exactly what authorizations the seller needs to operate.  Second, you need to verify that the seller has maintained and still maintains those licenses without any conditions imposed for past violations.  There are two basic kinds of licenses.  The first kind are licenses for a business to generally be authorized to operate in a state.  Businesses that are organized in a state are able to conduct business in that state upon organization.  However, companies that engage in businesses other than their state of organization, must qualify to do business in those other states by filing a license for a foreign registration.  The second kind of license is industry specific, that is, licenses that are required as a result of the specific industry the seller engages in.  Those licenses could be required by local, state and/or federal government agencies, or by an independent industry regulatory body.  Many more kinds of businesses are regulated and require specific licenses than one might expect.  For example, in Maryland, there are several different types of well-driller’s licenses that a well-drilling company must obtain in order to operate.  Make sure that you know the ABCs of the licenses your seller’s business must have, so that you secure those licenses and can lawfully operate on day one after the closing.



Glenn D. Solomon Esq., is a principal at the law firm of Offit Kurman and has provided counsel to businesses and business owners for more than twenty-five years, with extensive experience in the purchase and sale of businessesstructuring ownership agreements, and advising companies in financial distress.







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