What FAR 42.12 actually does
FAR Subpart 42.12 is how the government agrees that a successor may perform. The anti-assignment rules are not waived because both parties are eager. Counsel runs the package. If you are selling a manufacturing business that holds vehicles, put novation on the Gantt chart before exclusivity.
A stock sale can change who owns the contractor without an asset assignment. It can still trigger other reviews. Do not publish “stock skips novation” as a slogan. Counsel diagnoses the vehicles. Aerospace and defense suppliers is the sector sibling.
Census CBP 2023 counted 284,452 manufacturing establishments (Source: Census CBP). Most never hold a federal vehicle. The ones that do should price transfer friction, not hide the mix.
What does not travel with the contract
8(a), SDVOSB, WOSB, and HUBZone status usually do not travel as freely transferable assets. A sale can end the set-aside the Monday after close. Price the book as if the status may vanish. Cybersecurity requirements are versioned and contract-specific. Do not hard-code a blog acronym as eternal.
ITAR is a different pile. Foreign-person control can add a 60-day DDTC notice. CFIUS is a third pile. None of those calendars replace FAR 42.12.
| Calendar | What it recognizes | What it does not do | Who runs it |
|---|---|---|---|
| FAR 42.12 novation | Successor on assigned vehicles | Transfer set-aside status | Government counsel |
| ITAR § 122.4(b) | Foreign-person control of a registrant | Satisfy CFIUS | Export counsel |
| CFIUS | Certain foreign investments | Satisfy DDTC notice | CFIUS counsel |
| SBA 7(a) | A $5M change-of-ownership box | Guarantee novation timing | Lender |
How concentration plus transfer friction changes price
If the government book is 40% of sales, that is concentration plus transfer friction. Earn-outs and holdbacks are common. Hiding the mix is how teasers die. BizBuySell’s 2025 manufacturing median time to close was 223 days (Source: BizBuySell). Novation is additive.
SBA 7(a) still caps at $5 million with a 10% injection (Source: SBA). Eligibility and affiliation are lender questions. Do not assume a sponsor can wear an SBA hat on a set-aside contractor.
The FAQ index owns the question. The owner URL owns the vehicles, the set-aside warning, and the search-fund comparison.
Does a stock sale skip novation?
Stock can change who owns the contractor without an asset assignment, and still trigger other reviews. Counsel, not a blog, diagnoses the vehicles. Do not publish “stock skips novation” as a slogan. Set-aside status still may vanish. CMMC and related cybersecurity requirements stay versioned and contract-specific. Do not hard-code a blog acronym as eternal.
If the government book is 40% of sales, that is concentration plus transfer friction. Earn-outs and holdbacks are common. Hiding the mix is how teasers die. Search-fund medians from other rooms do not value a set-aside book.
Put novation on the Gantt chart before exclusivity. Counsel runs the FAR 42.12 package. A handshake does not assign a vehicle. Set-aside status usually does not travel. ITAR foreign-person control can add a 60-day DDTC notice. CFIUS is a third pile. None of those calendars replace each other. Price the contracts as if the status may vanish the Monday after close.
The FAQ index owns the question. The owner URL owns the vehicles, the set-aside warning, and the buyer-class comparison.
8(a), SDVOSB, WOSB, and HUBZone status usually do not travel as freely transferable assets. Cybersecurity requirements are versioned and contract-specific. Do not hard-code a blog acronym as eternal. A stock sale can change who owns the contractor without an asset assignment and still trigger other reviews. Do not publish “stock skips novation” as a slogan. Counsel diagnoses the vehicles. Search-fund medians from other rooms do not value a set-aside book. Price transfer friction in the letter.
Put FAR 42.12 on the Gantt chart before exclusivity. A handshake does not assign a vehicle. Set-aside status usually does not travel. ITAR and CFIUS are different calendars. If the government book is 40% of sales, price concentration plus transfer friction. Hide the mix and the teaser dies.
Cybersecurity requirements stay versioned and contract-specific. Do not hard-code a blog acronym as eternal. Search-fund medians from other rooms do not value a set-aside book. SBA 7(a) still caps at $5 million with a 10% injection. Eligibility and affiliation are lender questions. Do not assume a sponsor can wear an SBA hat on a set-aside contractor.
Price the vehicles as if set-aside status may vanish the Monday after close. Earn-outs and holdbacks are common when the government book is concentrated. Stock can change the owner and still leave other reviews on the calendar. Counsel diagnoses the vehicles. Do not publish a slogan. ITAR foreign-person control can add a 60-day DDTC notice. CFIUS is a third pile. None replace FAR 42.12. Hide the mix and the teaser dies. Price the friction in the letter.
Jason Taken is a business broker. Educational information only. Confirm novation and eligibility with government-contracts counsel. After you read the owner URL, book a confidential intro call if the file is real.