Should You Delay Closing if Permits Aren't Ready? Key Insights for Business Buyers

Today, I’m tackling a crucial question: If you're buying a bar or restaurant and can’t get the necessary liquor or food service permits in time, should you delay the closing? https://youtu.be/M8UH6Y2LrBM

Navigating Permits and Licenses: A Must-Know for Business Buyers

When purchasing a business, especially one that requires specific permits or licenses, it's essential to understand the implications and processes involved. Permits and licenses vary greatly between jurisdictions, affecting the closing timeline and overall viability of the business.

Understanding Permit Requirements

Before making an offer, you need to know which permits and licenses are required for operating the business. Here’s what you need to consider:

1. Corporate Structure and Personal Liability: Even if you operate under a corporate name, many permits, like liquor licenses, may require a specific individual to be responsible.

2. Health and Safety Certifications: Ensure key staff have the necessary certifications, such as food handling permits.

3. Local and State Regulations: Different permits may be required from state and local governments. Ensure all relevant permits are identified and obtained.

The Risk of Closing Without Permits

Closing a deal without the necessary permits can be risky. If you can’t secure the permits after the purchase, you may end up with a business you can’t legally operate.

Real-Life Examples

1. Restaurant Inspections: A buyer assumes a restaurant will pass health inspections based on its operational history. However, during the permit transfer, unexpected issues like missing fire suppression nozzles can arise, causing delays and additional expenses.

2. Liquor License Transfers: In some areas, transferring a liquor license requires a public notice period, potentially exposing the deal to public objections and delaying the closing.

Strategies to Mitigate Risks

1. Include Contingencies in Contracts: Make the closing contingent on obtaining all necessary permits and licenses.

2. Build Relationships with Inspectors: Experienced buyers often have relationships with inspectors, speeding up the permit approval process.

3. Stay Informed and Prepared: Research all relevant regulations and maintain open communication with permitting authorities.

Conclusion

When buying a business that requires permits, it’s critical to ensure all necessary licenses are secured before closing. This not only protects your investment but also ensures smooth operation from day one.https://www.DavidCBarnettList.com