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RGMacEsq
RGMacEsq, Attorney
Category: Business Law
Satisfied Customers: 11700
Experience:  Licensed Texas General Practice Attorney
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My business partners would like to exit the LLC we own in Pennsylvania

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My business partners would like to exit the LLC we own in Pennsylvania and I would like to keep the LLC because we have a website business and I don't want to go about changing the name and starting over. What can they ask from me as far as a buyout?
Submitted: 1 year ago.
Category: Business Law
Expert:  RGMacEsq replied 1 year ago.

RGMacEsq :

Thank you for using JustAnswer. I am researching your issue and will respond shortly.

Customer:

ok

RGMacEsq :

Absent a partnership / member agreement to the contrary (that could specify valuation of the business) they could literally ask for anything to sell you their interest in the LLC.

RGMacEsq :

A member interest is like any other asset.

RGMacEsq :

You could choose to sell your car, for instance, for a million dollars, even if it's not worth 1/100th of that.

RGMacEsq :

Whether someone is willing to buy that depends on how they value it.

RGMacEsq :

Now if you can't come to an agreement, then the LLC and assets would be sold and the proceeds distributed equally.

RGMacEsq :

So generally if you offer more than what the liquidation value is to the members, a rational individual should accept that.

RGMacEsq :

But there's nothing under the law that requires that they do so.

Customer:

We literally just started out and have no sales right now. Can they ask for their initial investment or money they have put towards marketing collateral for instance?

RGMacEsq :

Certainly.

Customer:

My pa

RGMacEsq :

Again, this is entirely subjective, and can ask for that amount, or 10x that amount, etc...

RGMacEsq :

And you can agree to pay the amount asked or not.

Customer:

Oops.. my partner was talking about the value of our facebook page, twitter page, which I don't see how they can put a number on

RGMacEsq :

It would be difficult to valuate, that's for sure. And ultimately the true value is what someone is willing to buy it for and someone is willing to sell it for.

Customer:

Can they come up with a value of sweat equity as well?

RGMacEsq :

Yes.

RGMacEsq :

Again, without an agreement to the contrary, they can ask for whatever they want.

Customer:

And can I subtract my time I put into all the marketing and advertising and selling I did on my own time without getting paid. Along with all the gas and mileage?

RGMacEsq :

Yes. That's up to you. Again, it's entirely dependent upon the seller and the buyer coming to an agreeable price.

RGMacEsq :

You can justify what you're willing to pay based upon those factors, and try to negotiate downward.

RGMacEsq :

But you don't automatically get a deduction based upon that.

RGMacEsq :

Again, it's entirely up to the members as to what the price they're willing to pay / sell for.

Customer:

As far as a trademark goes... How do you value a trademark name?

RGMacEsq :

Same exact way. It's the intersection of what someone is willing to sell his/her interest for and what someone is willing to pay.

RGMacEsq :

In a new business, that's not very much, but depends on long term growth properties, etc...

RGMacEsq :

Accountants typically use other names in the business and tie it to profits of the other companies, how strong it is, how known, etc...

Customer:

ok.. I am starting to think it may be cheaper to just start from scratch and start a new considering we had no sales yet

RGMacEsq :

But in a new company, that's almost impossible to value forenssically.

RGMacEsq :

It all depends on what they would be willing to sell you their interest for. But that might just be the case if they're being unreasonable.

Customer:

My partner is trying to sell me on the fact that it may be cheaper to just buy them out then to start a new

Customer:

I am not even sure how much it costs in PA to start an LLC. My partner set it up. I have the documents at home

RGMacEsq :

And so you should really look into that so that you can compare what it would cost to start one up versus buying.

Customer:

ok sounds good. I appreciate all of your help.

RGMacEsq :

My pleasure.If you have any other questions, please let me know. If not, and you have not yet, please rate my answer AND press the "submit" button, if applicable. Please note that I don't get any credit for my answer unless and until you rate it a 3, 4, 5 (good or better). Thank you, XXXXX XXXXX good luck to you!

RGMacEsq, Attorney
Category: Business Law
Satisfied Customers: 11700
Experience: Licensed Texas General Practice Attorney
RGMacEsq and 10 other Business Law Specialists are ready to help you

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