The Essential Guide to Buying or Selling a Part 145 Repair Station: What You Need to Know
The aviation maintenance industry is highly regulated, and buying or selling a Part 145 Repair Station requires careful planning to ensure compliance with FAA regulations, a seamless transfer of certifications, and a structure that benefits both parties. Whether you're looking to acquire an FAA-certified maintenance facility or sell one, understanding the nuances of an asset sale vs. stock sale can save you time, money, and potential legal trouble.
Understanding the FAA’s Role in a Part 145 Repair Station Sale
The Federal Aviation Administration (FAA) governs Part 145 Repair Stations, which are specialized facilities authorized to perform maintenance, repair, and overhaul (MRO) services for aircraft and aircraft components. Unlike standard business transactions, transferring ownership of a Part 145 Repair Station involves FAA oversight to ensure operational continuity and regulatory compliance.
Both buyers and sellers must work closely with the FAA’s Flight Standards District Office (FSDO) and submit required applications to ensure a seamless transition. The FAA does not allow automatic certificate transfers, so choosing the right sale structure is critical.
Asset Sale vs. Stock Sale: Choosing the Right Structure
One of the most important decisions in a Part 145 Repair Station transaction is whether to proceed with an asset sale or a stock sale. Each approach has its own set of benefits and challenges.
Asset Sale: Pros & Cons
In an asset sale, the buyer purchases selected assets (e.g., equipment, contracts, customer lists), but the legal entity and its FAA-issued Repair Station Certificate do not transfer automatically. Instead, the buyer must apply for a new Part 145 Repair Station Certificate, which requires FAA approval before operations can continue.
Pros of an Asset Sale:
✔ Limited Liability Exposure – The buyer does not inherit unknown debts, legal claims, or past compliance issues.
✔ Tax Benefits – The buyer can receive a stepped-up basis in assets, leading to better depreciation benefits.
✔ Customization – Buyers can select only the valuable assets and avoid unwanted liabilities.
Cons of an Asset Sale:
✖ FAA Recertification Required – The buyer must go through the FAA application process, which can take several months, delaying operations.
✖ Customer Contracts & Vendor Agreements – Existing agreements may not automatically transfer and could require renegotiation.
✖ Disruptions in Operations – The business may experience a temporary shutdown while awaiting new certification.
Stock Sale: Pros & Cons
In a stock sale, the buyer purchases the entire legal entity, including the FAA Repair Station Certificate, employees, contracts, and liabilities. This is often preferred because the business can continue operating without FAA recertification.
Pros of a Stock Sale:
✔ FAA Certificate Remains Intact – The buyer takes ownership of the existing repair station without needing to apply for a new certification.
✔ Operational Continuity – No downtime or disruptions due to recertification delays.
✔ Maintains Contracts & Agreements – Customer relationships, vendor contracts, and lease agreements typically stay in place.
Cons of a Stock Sale:
✖ Liability Exposure – The buyer assumes all past liabilities, including potential compliance violations, employee claims, or outstanding debts.
✖ Tax Considerations – The buyer does not get a stepped-up tax basis in the assets, which may impact depreciation benefits.
✖ Due Diligence Is Critical – Buyers must conduct extensive due diligence to identify any hidden risks.
Key Requirements for a Successful Transaction
For Sellers:
FAA Notification & Compliance – Notify the local FSDO of the planned sale and work with FAA inspectors to ensure a smooth transition.
Clear Financial & Legal Records – Prepare clean financial statements, FAA compliance records, and an operational history.
Disclose Liabilities – If selling through a stock sale, be transparent about outstanding legal, financial, or compliance risks.
Negotiate Terms – Work with M&A experts and aviation attorneys to structure favorable terms that minimize future disputes.
For Buyers:
FAA Approval Process – If choosing an asset sale, prepare for the lengthy FAA certification process.
Due Diligence – Conduct a thorough review of regulatory compliance, financials, customer contracts, and pending litigation.
Understand Tax Implications – Work with a tax advisor to assess depreciation benefits and liability risks.
Secure Transition Agreements – Ensure the seller provides transition assistance for smooth knowledge transfer.
Final Thoughts: Which Sale Structure is Best?
If the primary goal is to avoid operational downtime and FAA recertification hassles, a stock sale is the better option.
If liability protection and tax benefits are the priority, an asset sale may be the safer route, despite the recertification delay.
Regardless of the structure, early engagement with the FAA, thorough due diligence, and strategic negotiation are essential for a successful Part 145 Repair Station transaction.
Looking for expert guidance on buying or selling a Part 145 Repair Station? Contact Tony Miller at www.tonymiller.la/calendar to discuss your next steps!