Key to Compliance:  Business License Assessment - Mergers & Acquisitions

Key to Compliance:  Business License Assessment - Mergers & AcquisitionsMergers and acquisitions (M&As) are commonplace in business, and in recent years, the North American market has experienced a record number. According to the Institute for Mergers, Acquisitions and Alliances (IMAA), 2015 generated $4.7 trillion in announced deals, the largest value ever for a given year. [1] In 2017, there were over 18,000 M&As among North American companies. [2]  Just recently, Dow Chemical Company and DuPont successfully merged to create DowDuPont in a deal worth a reportedly $130 billion. [3]  The business intends to create three separate entities to handle materials science, specialty products, and agricultural; each entity will operate with unique business name. [3] These deals are highly scrutinized by corporate attorneys on both sides of the transaction; however, business license requirements are usually an afterthought at the boardroom table.

The complexity of transactions such as DowDuPont’s from a licensure standpoint is not realized unless all moving parts of the deal are analyzed: knowing what, if any, business licenses the recently acquired company holds and if the licenses are at all valid after the conditions of the M&A are met.  Furthermore, what constitutes a “valid” license is determined by a myriad of Federal, State, County, and City regulatory bodies and is based on many variables.  Factors impacting licensure may include ownership change percentages, changes in the board of directors, the impact on the legal business name, the status of a qualifying agent for a professional license, and many more.  An M&A can also add a new business activity to a company’s portfolio, requiring new license filings.  Keep in mind that penalties for operating without a valid license can be steep, such as the $300,000 fine levied to a company for not obtaining a Santa Monica City Business License in February 2018. [4]

LicenseLogix offers a service that is particularly crucial before, during and after an M&A: Business License Assessments.  Our Business License Assessments research the required licenses your business needs at the federal, state, county and city level; verifies the status and renewal dates for licenses already held by your business; identifies gaps in your license portfolio; and provides accurate application instructions to quickly obtain licenses not already held.   We have the ability to customize each Business License Assessment to account for your M&A transactional needs.  A Business License Assessment is the key to compliance during a complex M&A and should be included in every company’s due diligence prior to closing.

Furthermore, LicenseLogix is uniquely poised to assist with the downstream effects that an M&A imposes on licensing. We deploy a full service team of research analysts to identify industry requirements based on the deal terms and provide instructions to ensure compliance with licensing standards. In situations where a license is not held, our Account Services team is exceptionally familiar with filings throughout a diverse array of industries and can execute these submissions on your behalf.   

Let LicenseLogix’s Business License Assessment service assist your business through complex business transitions. Contact us today for a free quote.  

[1] A Standout Year for Deals, in Volume and Complexity

[2] Mergers and Acquisitions Statistics

[3] DowDuPont Unveils Corporate Names for its Three Units

[4] Bird Ride Inc. to Pay Over $300,000 in Fines, Restitution