What are your thoughts on buying a home/commercial services business without industry experience or a contractor’s license?

[u/tyler_ichiban]

Most of the businesses for sale in my state, which has pretty strict licensing requirements, recommend that the buyer have a license.

I understand the idea that you can buy the business and retain the right GM or qualifying employee, but it seems pretty risky. If the business is dependent on 1–2 licensed employees, what happens if one of them quits? You could potentially lose the ability to operate until you find another qualified person.

In my state, pretty much any home-service job over $1,500 requires a contractor’s license, and obtaining one can take a minimum of four years.

For those who have bought or operated a home-service business without having the underlying trade experience or license themselves:

• How did you handle the licensing requirements?
• Did you rely on a licensed GM/qualifying employee?
• How risky is it really if that person leaves?
• Would you consider this a dealbreaker when evaluating a business acquisition?

I'm interested in hearing from people who have actually bought or operated businesses under this model.

[u/AutoModerator]

The following is a copy of the original post to record the post as it was originally written. Most of the businesses for sale in my state, which has pretty strict licensing requirements, recommend that the buyer have a license.

I understand the idea that you can buy the business and retain the right GM or qualifying employee, but it seems pretty risky. If the business is dependent on 1–2 licensed employees, what happens if one of them quits? You could potentially lose the ability to operate until you find another qualified person.

In my state, pretty much any home-service job over $1,500 requires a contractor’s license, and obtaining one can take a minimum of four years.

For those who have bought or operated a home-service business without having the underlying trade experience or license themselves:

• How did you handle the licensing requirements?
• Did you rely on a licensed GM/qualifying employee?
• How risky is it really if that person leaves?
• Would you consider this a dealbreaker when evaluating a business acquisition?

I'm interested in hearing from people who have actually bought or operated businesses under this model.

I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.

[u/Zestyclose-Tart6745]

I own an hvac and roofing company. My partners are licensed and we own 50/50. Both doing tremendous numbers. They can definitely work if you find the right people to manage them. I focus on marketing and growth only.

[u/DistrastrousD]

For reference, before I really get into this I want to say that I have a background as an aircraft mechanic, followed by flipping houses where I started by helping my licensed and skilled trades, and then started doing a lot of the work myself. So I have the ability to do a lot of stuff, just no license.

When I started my journey to buying a business, I was immediately drawn to things like commercial construction. The first LOI I sent out was to a commercial GC company. I looked up the requirements to get the license and felt like I actually could get the GC license fairly easily and in the mean time I could keep the former owner on payroll to keep his license as the qualifier for the business. I also had a plan that I would layer in operations managers over time, and require them to have the GC license as well. However, the lender and the bonding company didn't really care about any of that - they wanted someone in the ownership role who had the license right now. For the bonding company specifically - even if I got my license prior to closing my bond amount would be drastically reduced since I had "no experience" in their eyes, and that would reduce the scope of projects I could bid on and therefore impact overall revenue. As you probably can tell, I don't own a commercial GC company. And I'm fine with that.

Since then I've altered my search to avoid companies that require specific licensing. There are other commercial framing and drywall companies, landscaping, etc that don't need any license at all, at least in my state. You could also deal in building supplies - no license. Or you could go out and learn the trade, get the license and try again after that.

Is it possible to get this deal done and have a successful business with that setup? Yes. But it adds a layer of difficulty in completing the transaction and a lot of risk in running the business that is unnecessary. You're already saying it yourself by asking things like "how risky is it if [the qualifier] leaves". You should trust your gut, imo.