A limited liability company is one that combines the security of a corporation with the simplified taxable structure of a partnership. This type of company can change from one owner to two or more and then back again with a few signatures. The most difficult part of dissolving a partnership in an LLC is determining the value of the company so that one partner can buy the holdings of the other. There are several methods for determining the value of your company. You will need to meet with your partner to discuss which method suits your situation best.
Decide on a fixed price for the value of your company. Meet with your partner and discuss the company's finances, employees, tax situation and any other factors you both think affects the price. Agree on a fair price for the value of your company. Divide that number by two to determine the buyout price one partner must pay to the other.
Figure out the book value of the company. Add all of the assets together. Include vehicles, real estate, inventory and other physical assets along with your financial assets like bank accounts and regular income from clients. Subtract each of the liabilities from this total to get the book value.
Decipher the multiple of book value of your company. Determine the straight book value. Add the estimated value of each of the company patents, copyrights, brand names, trade names and other intellectual property. Both partners must agree on these estimates.
Use the capitalization of earnings method for determining the company's value. Older companies have a long history of profit records. The yearly increase in profits can be determined with these records. A company that steadily increases in profit by 5 percent each year, for example, can be expected to do the same this year. Figure out the straight book value and add the next few years estimated profits to determine company value.
Hire a professional business appraiser to do a complete assessment of your company. Meet with your partner and the appraiser and review the appraisal. Accept the appraisal as the value of your company.
After learning electronics in the U.S. Navy in the 1980s, Danny Donahue spent a lifetime in the construction industry. He has worked with some of the finest construction talent in the Southeastern United States. Donahue has been a freelance writer since 2008, focusing his efforts on his beloved construction projects.