A multiple member (limited liability company) LLC is a type of partnership between members. As an LLC member you have the power to decide to sell off your percentage of the LLC just as you would sell stock in a company to another party. If you own a single member LLC you can sell a percentage of the LLC to a new partner. Completing this type of sale requires some negotiation and an official written agreement.
Review your current LLC operating agreement or buyout agreement to determine terms and conditions of selling your percentage share in the business. In some cases you’re required to offer the percentage to other members first or have the other members approve the new member. If you’re a single member LLC, you control the terms.
Hire a business valuation consultant to estimate the market value of the business. Determine the percentage of ownership you plan to sell to come up with the asking price for the share of the company. For instance, if the business is valued at $100,000 and you want to sell a 25 percent stake, the asking price is $25,000. Without a formal valuation both you and the potential buyer must negotiate a fair price for the stake.
Negotiate with the new potential member who wants to buy the stake. Draw up a sales agreement that describes the final terms of the sale including price, ownership percentage, required investments, rights and responsibilities as a member. Before you draw up this agreement, make sure you have the final agreement of any other existing members if required per your existing operating or buyout agreement.
Modify the existing LLC operating agreement to list the new member after the sale is complete. Include the new percentage splits for each member, member duties and rights to profits. Distribute the new agreement to all members.
Send a copy of your updated operating agreement for filing with the state business bureau where you first established the LLC.
Get the help of a lawyer to negotiate with the new member, existing members and finalize the sale.
- Get the help of a lawyer to negotiate with the new member, existing members and finalize the sale.
Louise Balle has been writing Web articles since 2004, covering everything from business promotion to topics on beauty. Her work can be found on various websites. She has a small-business background and experience as a layout and graphics designer for Web and book projects.