Buying
6 min read2023-11-28Dormant Licence Acquisitions: Opportunities and Risks
Veritas Connect Team
M&A Regulatory Specialists
Dormant regulated entities can offer fast market entry at lower cost, but hidden risks require careful due diligence.
A dormant licence can be an attractive entry point, but the discount reflects real risks that savvy buyers must navigate.
Why Firms Go Dormant
- Failed business model
- Key person departure
- Capital constraints
- Strategic pivot by parent company
Due Diligence Red Flags
- Extended dormancy (regulator may question viability)
- Outstanding regulatory correspondence
- Lapsed insurance or audit relationships
- Capital erosion
Reactivation Timeline
Expect 3-6 months to bring a dormant firm back to full operation, including staff hiring, system implementation, and regulatory notification.