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Law Pro
Law Pro, Attorney
Category: Business Law
Satisfied Customers: 24057
Experience:  20 years experience in business law - sole proprietor, partnership, and corporations
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Can this site handle questions on business law in North Dakota?

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Can this site handle questions on business law in North Dakota? Regarding the seperation of a LLP.
Submitted: 1 year ago.
Category: Business Law
Expert:  Law Pro replied 1 year ago.

Welcome to JustAnswer! My goal is to do my very best to understand your situation and to provide a full and complete excellent answer for you.

My name is XXXXX XXXXX I'm going to assist you with your question.

Please bear with me if you believe my answer isn’t coming fast enough because I’m also working with other customers too. I apologize for any seemingly late response.


Exactly what is your question regarding "separation of an LLP"?
Customer: replied 1 year ago.

My business partner and I are seperating I'm moving on. He is wanting me to just sign away the business to him. We currently carry approx 500k in debt and last year we grossed 1.2 million. Do you think its wise to just sign it away. He was the one who put up the cash and credit to get us started. However I'm the one who did all the leg work and operations the last year and a half. I'm also curious about how we dissolve a llp into a llc. I need advice my uncle suggested I talk to you guys about this.

Expert:  Law Pro replied 1 year ago.
Well first, an LLP is a limited liability partnership and you "wind it up" pursuant to your LLP agreement.

Business owners operating under a sole proprietorship or general partnership may form a new LLC entity at any time or join an existing one by establishing a limited liability company and start operating the business under the newly formed LLC.

Transfer all assets that are under the current business entity to the newly formed limited liability company with a bill of sale. Include any tools, equipment, software, hardware and all items used in the previous business to the LLC.

After the LLC is formed and all assets have been transferred, terminate the old general partnership or sole proprietorship by agreement of the LLP partners.

However, as to sale of the LLP and it's value - heck NO - I would NOT sign away my interest therein but get the LLP appraised by a CPA and demand your interest OR don't sell out your interest in the company.

Yes, some partners contribute money - others contribute their time and effort. However, if the business is successful - one necessarily isn't worth more than the other.


So you need someone to evaluate the business's value and determine a value for the entire company and therefore, indirectly, your interest therein.

There is absolutely NO WAY I would just sign away my interest in the LLP without a professional evaluation or appraisal of it's value.

Value is driven by assets and liabilities, income, management, location, and all of the factors that make a business unique.

t could be said that valuing a business is as much an
art
as a science. There is no precise formula that applies to all businesses in all sectors, nor even to all businesses within a sector. Instead, an accurate valuation will depend on consideration of a number of factors. These include:
  • The size of the business - larger firms tend to be viewed as less risky and so attract a higher price, even if they are less efficient than smaller competitors
  • The prospects for future growth - buyers sometimes pay more for businesses with high growth rates because they repay the investment more quickly. You might consider selling before turnover and profits level out
  • Diversification - if you have a wide 'business mix' it can affect the sale price, since buyers may only be interested in one area or market
  • Customer base - the size of your customer base is important, but so is the quality of your customers and the cross-selling opportunities
  • Profitability - although generally the higher the profits, the higher the value, some buyers might prefer a business with areas in which large efficiency savings can be made
  • Cashflow and financial management - the size and certainty of cashflow, and the strength of the balance sheet and financial management are all vital factors.
So, I would look for a local CPA to evaluate the business's value and then determine your interest in the business - thereafter, and only thereafter, would I agree to a sales price for your interest in the business.


Thank you so much for allowing me to help you with your questions. I have done my best to provide information which will be helpful to you. If I have not fully addressed your questions or if you have any follow up questions, or if I have misinterpreted your questions in any way, please do not rate me yet, but simply ask a follow up question without rating so I can provide you with a fully satisfactory answer. If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service with 3, 4, or 5 faces/stars so I can receive credit for helping you today. I thank you in advance for taking the time to provide me a positive rating!
Customer: replied 1 year ago.

Thanks I was thinking that as well. If I get a decisive offer that I'm willing to accept. What steps do I need to take to release me of any further liability from the company?

Expert:  Law Pro replied 1 year ago.
Then you need to finalize a "buy-out" agreement whereby you are released from any and all future liability.

 

Under a buyout agreement, the partners agree on a price for the value of the ownership interest, and also agree on payment terms, such as an initial payment and terms of payments over time.

 


But that should most likely be determined after the CPA determines the value of the business and it's potential ability to sustain buying the partner out.


Thank you so much for allowing me to help you with your questions. I have done my best to provide information which will be helpful to you. If I have not fully addressed your questions or if you have any follow up questions, or if I have misinterpreted your questions in any way, please do not rate me yet, but simply ask a follow up question without rating so I can provide you with a fully satisfactory answer. If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service with 3, 4, or 5 faces/stars so I can receive credit for helping you today. I thank you in advance for taking the time to provide me a positive rating!
Law Pro, Attorney
Category: Business Law
Satisfied Customers: 24057
Experience: 20 years experience in business law - sole proprietor, partnership, and corporations
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