Certification – Have you thought about the future?

Post 13 of 38

mbe-certification-logoThere are three main types of enterprise certifications for businesses: Women-Owned Business Enterprise (“WBE”), Minority-Owned Business Enterprise (“MBE”) and Disadvantaged Business Enterprise (“DBE”). To obtain certification, the ownership, management, and control must be at least 51% women, minority or disadvantaged, depending on which certification you are obtaining. As those who are certified know, these certifications can result in numerous contracts, since a certain percentage of many governmental contracts are required to go to certified companies. In addition to governmental work, some private companies have started hiring a larger percentage of certified companies.

Once certification is obtained, a yearly update is required to maintain most certifications. Frequently, a simple lack of planning can result in a loss of certification.  For example, let’s take a business that is certified as a WBE and a DBE with two owners, a 51% female owner who is also classified as disadvantaged and a 49% owner who is male and has a net worth above the threshold.  The 51% owner unexpectedly passes away.  Her two children, a boy and a girl, inherit not only her business interests but receive a life insurance payout.  With this event, the business can lose both their WBE status (since the son inherited 25.5%, now men own more than 51%) and all of the owners have a net worth higher than the DBE net worth requirements.  With proper planning, this result could be avoided.

Taking the same fictional company, instead of the 51% owner passing away, let’s instead say the 51% owner’s sole parent passes away, and the owner inherits all of the estate, pushing her well above the DBE income threshold.  This would de-certify the company as a DBE without proper planning and management.

These are just a few examples of events that can cause a loss in certification. To discuss ways to obtain certification or to protect your status as a WBE, MBE or DBE, please contact Kristy Bourgeois at kbourgeois@sandbergohoenix.com, (314) 446-4206 or another member of Sandberg Phoenix & von Gontard, P.C.’s Construction Industry Team.

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The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation.
This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship. © 2016 Sandberg Phoenix & von Gontard P.C. All Rights Reserved.

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