The M&As Most Overlooked Liability
Why you need to worry about business license compliance before, during, and after a merger & acquisition.
You can acquire a company and possess their assets. You can merge with their staff and take advantage of their experience. You can purchase their patents and own their business model. But you can’t automatically absorb their business licenses or their regulatory licenses or even their building permits. That’s the inconvenient reality that frustrates many buyers during the M&A process. The more due diligence you and your legal department muster, the more obvious it will be that business and regulatory licenses — such as financial, security, food, alcohol, contractor, and environmental licenses — are serious problems that simmer beneath the surface. If you are counting on operating your acquired locations on day one, selling your new products on day two, and keeping your distribution and supply chain functional on day three and beyond, then you better be confident that the business licenses owned and maintained by your acquired entity are up-to-date and that a strategy is in place to transfer them to your possession.
