Change of Ownership

General Information

What does change in ownership mean within the context of the 8(a)/Business Development Program?

Ø      New owner(s)

Ø      Changes in ownership percentages

Ø      Changes in management             

(e.g.: A non-disadvantaged individual becomes CFO and is issued stock)

When must SBA be notified?                 

Ø      Before the actual change is made as per 13 CFR 124.105 & 305(h)

What does the SBA look for? 

Ø      Terms and conditions of the change in ownership

Ø      Contingencies; e.g.: employment contracts; consulting agreements; subcontracting financing agreement; etc.

Ø      Background of new owners and percentages of interest to be acquired

(13 CFR 124.101,102,103,104,105,106,107,108,112 (continued eligibility))

Types of Changes:

Ø      Sole Proprietorship to Corporation

Ø      Corporation to Limited Liability Corporation

Ø      Mergers:  sole proprietorships to partnership or corporation. One corporation into another corporation

Ø      Mentor acquiring an interest in the protégé (limited to 40%)

Ø      Dissolutions

Ø      Asset Purchase (emphasis place on the financing arrangements)

Ø      Bankruptcies - Chapter 11

Ø      Court Ordered Receiverships