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Jane T (LLC)
Jane T (LLC), Attorney
Category: Business Law
Satisfied Customers: 8435
Experience:  Worked in corporation's law department; business formations, formalities, and other business matters
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Does a LLC have to purchase back your stock/shares if you want to sell

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I am considereing purchasing a percent of a technology company that is selling it's technology to a major company. My investment gives me 3% of the profits from the sale of the technology and gives me a board member position. In the contract it states that if for some reason the deal fails, we would be paid back our investment plus 10%. However, if the sell goes through and we decide to sell our % back to the tech co., do they have to buy it back?

DearCustomer

 

A company, and any other person, does not normally have to buy back its own stock or shares UNLESS they enter a contract that places that obligation on them (and even then there is no guarantee but at least there is a right to sue them for a breach of contract if they fail to comply with such requirement). Therefore a company can agree to do so, but it does not have to. Such agreements may be negotiated during talks prior to purchase or sale. In any investment or purchase of a corporation, however, it would be best to have an attorney in your state review the contract terms to determine what the terms mean, their enforceability, and the protections provided or which may want to be negotiated. There may also be restrictions on the sale of any private company stock, so anyone purchasing it may also want to know if any restrictions exist, such as "right of first refusal", "predetermined price", how to determine price at time of sale, and many other issues that may arise. This is another reason why attorney help, from an attorney hired in your state by you, shoud be considered.

 

 

 

 

Jane T (LLC) and 2 other Business Law Specialists are ready to help you
Customer: replied 7 years ago.
Thank you for your help. We'll negotiate that into the contract.

DearCustomer

 

Again, you should speak to an attorney in your state to review your entire contract to help you better determine what you should negotiate for. There may be other terms or langauge in any contract which a non-legal person may not fully comprehend and it is important to be sure there are no surprises in any investment or business dealing.