Should You Delay Closing If You Can’t Get Permits?

Should You Delay Closing If You Can’t Get Permits?

Today, I’m addressing a question from a viewer about whether to delay closing on a business purchase if you can't get the necessary liquor or food service permits in time. This is an important topic with many nuances, especially for businesses like bars and restaurants. https://youtu.be/M8UH6Y2LrBM??

Why Permits and Licenses Matter

When buying a business, securing the right permits and licenses is crucial. These can include food handling permits, liquor licenses, and other regulatory approvals. Here’s why:

1. Legal Compliance: Operating without the necessary permits can lead to fines or business closure.
2. Personal Liability: Many permits require a designated individual responsible for compliance, making it crucial to have the right person in place.
3. Operational Readiness: Without the necessary permits, you can't legally operate, impacting your business's immediate functionality and revenue.

Variations by Jurisdiction

Regulations vary widely by location. For example, some areas require public posting of license transfers, which can affect confidentiality and potentially delay the process. Here are a few steps to navigate these challenges:

1. Research: Look up local, state, and federal requirements for your business type.
2. Early Discussions: Include permit contingencies in your purchase agreement to allow for delays.
3. Verify Existing Permits: Ensure the business currently holds the necessary permits for its operations and confirm what’s needed for the new ownership.

Real-World Examples

• Food Handling Permits: Sometimes, existing permits can be temporarily maintained while new permits are processed, but this can create liability for the seller.
• Fire Safety: An example involved a pizzeria needing an additional fire suppression nozzle before the sale could proceed.
• Public Posting Requirements: In some areas, liquor license transfers require a public notice period, impacting the closing timeline.

Practical Advice

1. Consult Local Authorities: Build relationships with permitting agencies to understand the process and timelines.
2. Include Contingencies: Make the deal contingent on obtaining all necessary permits to protect yourself from unexpected delays.
3. Use Expert Help: Consider hiring professionals familiar with local regulations to assist in the process.

Conclusion

If you can’t get the necessary permits in time, it’s wise to delay closing until all regulatory requirements are met. For more detailed strategies and tips, check out my course, Business Buyer Advantage : Online Training, and join my email list for exclusive insights.

Thanks for tuning in! If you have any questions or need further advice, feel free to reach out. Have a great day!