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OPINION
A rchitecture and engineering firms do not operate like most other businesses. They are heavily regulated, with state laws setting the rules around who can offer professional services, how firms are structured, and even what they can be called. That makes mergers and acquisitions especially tricky because a single misstep can ruin the deal. State licensing and tax compliance can make or break your deal, so you must plan early to protect value, avoid liability, and ensure a smooth transition. Fix compliance gaps before they cost you
Karen Poist, CPA
Whether you are merging, acquiring, selling, or planning for internal succession, compliance must be front and center, not something you check off after closing. Without a proactive plan, you could run into issues such as invalid firm licenses, unexpected tax bills, or the need to completely restructure your legal entities. Most firms focus on the financials and legal documents during a deal, and rightfully so. But they should also assess licensing, ownership structures, new registrations, and new state obligations. Getting ahead of these matters helps avoid delays, protects the deal’s value, and sets the buyer and seller up for a smoother transition and future success.
STATE TAX NONCOMPLIANCE: THE INHERITED LIABILITY THAT KILLS DEALS An area that often gets overlooked, until it becomes a problem, is state tax compliance. If a target firm has not registered in states where it has nexus or has failed to file or pay the appropriate taxes (income, franchise, sales, gross receipts, etc.), those liabilities may not disappear in a transaction. In fact, buyers often inherit these obligations, and they can quickly turn a profitable deal into a financial problem. Due diligence should include a thorough review of multi-state tax filings, registrations, and potential audit exposure. And if issues are discovered, consider
See KAREN POIST, page 4
THE ZWEIG LETTER DECEMBER 1, 2025, ISSUE 1611
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