Transferring AS9100 to new Legal Entity

#1
Hi all!

We are looking at selling our Aerospace manufacturing company. It has been a long run, more than 50 years and 2 generations, but this past 18 months has been tough...

As a small company, a common way to sell is an "asset sale", which the buyer we are working with now requires to complete the deal. In this type of transaction the current company essentially ceases to exist, and the assets (machines, etc...) are sold into a new legal entity. In our case, the buyers are planning to keep the company operating exactly as it is now, same location, same team, same everything, they will even be "Doing Business As" (DBA) the current company name. Only thing that will change is the legal entity will be a new LLC or Corp, and a new owner. The new buyer and I are wondering if anything needs to be done for the AS9100 certification?

Thank you!
M2Imfg
 
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Ninja

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#3
Only thing that will change is the legal entity will be a new LLC or Corp, and a new owner.
I've always found that getting the wording precisely right helps to answer the rest of the questions more easily...so let me reword this statement...

"Only thing that changed is that the parts will be manufactured by a different company that is not yet AS9100 certified."
Because of this, Sidney's advice is spot on...getting said AS9100 certification may be easier (or at least faster) if you explain the full situation to the CB.

I never buy companies...I only buy assets (including building, equipment, inventory, IP, employment contracts etc.)...it breaks the liability chain, which I assume from your post is why you're doing it. You need to cert as the new corporate entity you are.
 
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#4
K. Any idea if there will be a
I've always found that getting the wording precisely right helps to answer the rest of the questions more easily...so let me reword this statement...

"Only thing that changed is that the parts will be manufactured by a different company that is not yet AS9100 certified."
Because of this, Sidney's advice is spot on...getting said AS9100 certification may be easier (or at least faster) if you explain the full situation to the CB.

I never buy companies...I only buy assets (including building, equipment, inventory, IP, employment contracts etc.)...it breaks the liability chain, which I assume from your post is why you're doing it. You need to cert as the new corporate entity you are.
Really appreciate this info!
 

Sidney Vianna

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#5
by a different company that is not yet AS9100 certified."
I don’t want to overthink this, but let’s remember that the certificate relates to the Quality System maintained by the organization. If no significant changes are expected, then no need for any additional audit. Mergers and acquisitions happen commonly to certified organizations and, some times, no impact on the short term for the certification. Nevertheless, you are required to notify the certification body because that is a significant event to the organization. The new owners might affect the quality system or not. Resources, commitment, management personnel, etc might be impacted or not. Just be upfront with CB and have the necessary dialogue.
 

Ninja

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#6
You would know that far better than I regarding the CB.

All the same, when a corporation (a separate legal entity) purchases the assets of another corporation...it is not a merger, and it is not an acquisition in strict sense. It is a whole new organization with it's own name and own EIN number with absolutely no remaining ties to the previous (lest lawsuits or liability follow through).
It is not a new owner of the existing company, it is a new company. It is a new owner of the assets, but quite intentionally NOT a continuation of the corp.

I would like to think it would be easier to recert/newcert since nothing in the real world has changed, but in the IRS world and the legal world...everything stopped under one corp and it went into non-existence...and another corp started which 'just happened to' do the same thing with the same people and the same equipment at the same address.
 

dwperron

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#7
In our case, the buyers are planning to keep the company operating exactly as it is now, same location, same team, same everything, they will even be "Doing Business As" (DBA) the current company name. Only thing that will change is the legal entity will be a new LLC or Corp, and a new owner.

Planning to keep things exactly as they are now sounds great, but in reality the new ownership will be looking out for its investment, and often will make cuts. As a CB you would be asking me to trust that nothing will change, I would need objective evidence that nothing has changed.
 
#8
I would worry not so much about the quality system rolling over. I would worry about the fact the buyer is taking up the company as an asset sale when clearly it is not an asset sale at all. This makes me question their motives and you may have some concerns regarding liability for actions they take if as you say they will he using your machines making your products under your name with your personnel. I don't know how well you know the buyers but please do some due diligence and background checks good luck
 
#9
Also take a look at your states corporate laws and make sure both parties are not violating business law. At the very least the new owners will have to make it clear they are not affiliated with you in any way in order to protect yourself and be legal
 

Ninja

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#10
Howdy GovLove,
Not sure where you are coming from...but the difference between a sale of a corporation and the sale of assets of a corporation is basically a legal (liability/debt) and taxation thing. Keeping a dba for branding and name recognition is pretty common, both for mitigating customer shock and fear as well as balancing "goodwill" (a financial bucket which can then be depreciated in future years) vs. asset purchase which is a one time expense. The right to use the old name is an asset.

Your concern is valid, but is the same for either type of transition. Both can be "keep doing as is", and both can just as easily be "move all this stuff to our existing facility and fire everyone".
 
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