Avionics News January 2015 - 57

T h e re pa i r s ta t i o n c e r t i fi c a t e i s n o t a
p e r fe c t l y t ra n s fe ra b l e c e r t i fi c a t e .

in any industry. But one factor that is unique to repair stations
is the treatment of the repair station certificate.
The repair station certificate is not a perfectly
transferable certificate. If the old repair station sells its
assets, then the new owner must apply for an amended
repair station certificate or a new repair station certificate.
The application must meet each of the normal application
requirements, which can be a burden.
If the prior repair station had received its certificate
under older Federal Aviation Administration standards,
then it is possible that FAA policy changes may prevent
the new applicant from obtaining the same ratings and
operations specifications enjoyed by the old repair
station. This makes purchasing the assets of the repair
station a gamble, which could drive down the value of the
repair station assets if the seller and buyer fail to work
closely with the FAA throughout the entire process.
When a seller is selling substantially all of the assets
of a repair station and the buyer intends to use them for a
new repair station, I always recommend the parties notify
the FAA at the earliest opportunity in the transaction.
Bringing the FAA in early allows the parties to explain
the transaction to the FAA. This should be done carefully
and with the guidance of a compliance attorney. You
must show the FAA at this early stage that the buyer
is considering the aviation safety and compliance
issues it will face as the owner/operator of an FAAapproved repair station; this is the strategy that will most
effectively bring the FAA employees in as partners in
this transaction. This is often best accomplished with a
written compliance plan for the new repair station.
In response, the FAA can let the parties know what the
FAA expects, and what unusual wrinkles the FAA foresees
in the process. Individual offices may have specific
actions or formats that they expect. Some of these will be
outside the scope of the FAA's regulations and, for those,
you must assess the likely burden associated with them -
sometimes complying with a small extra-legal request (like
completing a local office form that is not used by other
offices) can be far less burdensome than fighting against
the small extra-legal request. Your lawyer should be able

to help with this analysis. If you know the buyer will have
to apply for a new or amended certificate, then it may be
wise to assess which ratings you might be eligible for. If
the FAA believes a showing of compliance will permit it
to issue all of the same ratings, then this suggests a smooth
transaction. But if the FAA does not feel it will be able to
issue the same ratings, especially if the buyer was counting
on those ratings as part of its business plan, then this could
affect the value of the transaction - and the deal documents
should allow for this possibility and permit a transactional
remedy, such as a reduction in purchase price to reflect the
diminished value of the assets.
Remember, you can sometimes mix-and-match
when it comes to a business purchase. You can treat
the transaction as an asset sale for liability and FAA
compliance purposes, but still leave everything in place
in order to continue running as if the change in asset
ownership had not happened (like a stock transfer). This
is often accomplished by using the assets in the same
manner and using the same mechanisms and procedures.
Working with the FAA to demonstrate that the business
and compliance processes will remain unchanged may
help accelerate the certificate reissuance process, because
the FAA will already be familiar with the compliance
mechanisms of the prior structure.
Make sure your transaction plan shows how you will
operate during the period when the original certificate is
relinquished to the FAA and when the new or amended
certificate is issued. Unless you work closely with the
FAA, it can be difficult to line up this transition with the
closing of your transaction. Most FAA offices are willing
to work with you on timing (within their own limits), as
long as you take your compliance obligations seriously.
So remember to consider compliance throughout your
negotiation process. q

Editor's note: Jason Dickstein is the AEA's general counsel,
and he is located in Washington, D.C. In his private
practice, he has helped guide the mergers and acquisitions
of repair stations, manufacturers and distributors.
avionics news

*

january

2015

57



Avionics News January 2015

Table of Contents for the Digital Edition of Avionics News January 2015

Point of Communication
AEA Now
The View from Washington
International News and Regulatory Updates
Tackling Aviation's Universal Needs
Member Profile
Avionics in the Year 2025
A Conversation With...
My Life in Avionics
Marketing Tech Connections
What's Working?
Before & After
Business Basics
Debt Collection Tips
Aviation Aces
Legal Ease
Repair Stations
What's New
Avionics News January 2015 - Intro
Avionics News January 2015 - Cover1
Avionics News January 2015 - Cover2
Avionics News January 2015 - 1
Avionics News January 2015 - 2
Avionics News January 2015 - 3
Avionics News January 2015 - Point of Communication
Avionics News January 2015 - 5
Avionics News January 2015 - AEA Now
Avionics News January 2015 - 7
Avionics News January 2015 - 8
Avionics News January 2015 - 9
Avionics News January 2015 - 10
Avionics News January 2015 - 11
Avionics News January 2015 - The View from Washington
Avionics News January 2015 - 13
Avionics News January 2015 - International News and Regulatory Updates
Avionics News January 2015 - 15
Avionics News January 2015 - 16
Avionics News January 2015 - 17
Avionics News January 2015 - Tackling Aviation's Universal Needs
Avionics News January 2015 - 19
Avionics News January 2015 - 20
Avionics News January 2015 - 21
Avionics News January 2015 - 22
Avionics News January 2015 - 23
Avionics News January 2015 - Member Profile
Avionics News January 2015 - 25
Avionics News January 2015 - 26
Avionics News January 2015 - 27
Avionics News January 2015 - Avionics in the Year 2025
Avionics News January 2015 - 29
Avionics News January 2015 - 30
Avionics News January 2015 - 31
Avionics News January 2015 - 32
Avionics News January 2015 - 33
Avionics News January 2015 - A Conversation With...
Avionics News January 2015 - 35
Avionics News January 2015 - My Life in Avionics
Avionics News January 2015 - 37
Avionics News January 2015 - 38
Avionics News January 2015 - 39
Avionics News January 2015 - Marketing Tech Connections
Avionics News January 2015 - 41
Avionics News January 2015 - 42
Avionics News January 2015 - 43
Avionics News January 2015 - What's Working?
Avionics News January 2015 - 45
Avionics News January 2015 - 46
Avionics News January 2015 - Before & After
Avionics News January 2015 - Business Basics
Avionics News January 2015 - 49
Avionics News January 2015 - Debt Collection Tips
Avionics News January 2015 - 51
Avionics News January 2015 - Aviation Aces
Avionics News January 2015 - 53
Avionics News January 2015 - 54
Avionics News January 2015 - 55
Avionics News January 2015 - Legal Ease
Avionics News January 2015 - 57
Avionics News January 2015 - Repair Stations
Avionics News January 2015 - 59
Avionics News January 2015 - 60
Avionics News January 2015 - 61
Avionics News January 2015 - 62
Avionics News January 2015 - 63
Avionics News January 2015 - What's New
Avionics News January 2015 - 65
Avionics News January 2015 - 66
Avionics News January 2015 - 67
Avionics News January 2015 - 68
Avionics News January 2015 - 69
Avionics News January 2015 - 70
Avionics News January 2015 - 71
Avionics News January 2015 - 72
Avionics News January 2015 - Cover3
Avionics News January 2015 - Cover4
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