| Who to ask | The contracting officer for each contract, SAM.gov, and your government contracts attorney |
|---|---|
| What to file | A novation request for an asset sale, updated SAM information and any customer notices your contracts require |
| When | Plan the conversation with each contracting officer before you sign the purchase agreement |
Common snag: Contracts do not pass to a buyer just because the buyer paid for the company, so closing without a plan can put payments at risk.
Asset Sale or Stock Sale
How the deal is structured changes the government paperwork. In an asset sale, the buyer takes over contracts, and the government generally has to agree through a novation process.
In a stock sale, the company stays the same, but notices and records still change.
Most small deals are asset sales, so novation comes up often.
What Novation Means
Novation is the government's agreement to recognize the buyer as the party to a contract in place of the seller. Until it is approved, the seller remains responsible, and the buyer may not be paid directly.
Contracting officers review the request and may ask for financials and details about the buyer. Timing can be long, so buyers and sellers often agree on how to run the contracts in the meantime.
SAM Registration
Companies that sell to the government keep an active registration in the System for Award Management, with a unique entity ID and a CAGE code. A buyer needs its own current registration to be paid.
Ask your attorney how to update or close your registration after the sale and who handles that task.
Small Business Status
If a contract was awarded because you qualified as a small business, a sale to a larger company can change that status. Some agencies require a new certification after the sale. Review each contract with an attorney who handles government work.
Clearances and Records
Facility clearances are tied to the company and its owners, while personal clearances belong to individuals. Ask your security officer how a change in ownership is reported and what a buyer must have in place.
Keep past performance records, contract files and audit documents organized, since buyers value them highly.
What a Seller Usually Does
- Build a schedule of every contract, customer, end date and option
- Read each contract for assignment and change of control terms
- Meet with an attorney early to choose the deal structure
- Plan retention for program managers and cleared staff
- Agree who performs the work while novation is pending
Related Steps
For what buyers pay for, see government contractor values. Sensitive details need care, so read how to screen buyers.
Price splits matter too, as described in purchase price allocation.
This page is not tax or legal advice. Confirm each step with your contracting officers, your attorney or your CPA.
Curious about your range? Ask for a confidential valuation.