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Dimitry K., Esq.
Dimitry K., Esq., Attorney
Category: Business Law
Satisfied Customers: 41221
Experience:  Run my own successful business/contract law practice.
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I am planning to enter in a business arrangement with a person

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I am planning to enter in a business arrangement with a person I met recently. He has the business idea and wants me to invest money for a 50-50% split of profits. He will act as a manager in the business and also draw a 50K salary/year. I do not plan to run the business on a daily basis. I just plan to oversee things. Since I am the only one putting in money in the business, I want to keep some financial control over the business activity.He is propsing a manager managed LLC. After reading the operating agreement he sent me, I feel that I have no control over anything whatsoever.

If I want a say in all the financial agreements like debts etc, should I not go with manager managed LLC? What do you recommend in this situation?

Thank you for your question. Please permit me to assist you with your concerns.


A manager managed LLC treats you as a glorified investor but does not grant you any rights. The better option may be to create a 49/51 agreement with you retaining the right to make managerial decisions within a certain scope, such as on financial investments or payments above a certain threshold. That will create a a means by which you retain control and it will also create options and an oversight for his managerial options. In essence he will conduct operations while you are a glorified Board that could overrule him in certain instances.


Hope that helps.

Customer: replied 3 years ago.

Thanks. Will this type of arrangement classified as Manager Managed ? If not what is the classification? And whats the best way to draft such an agreement ?



There is no specific classification under US law--an LLC is simply defined differently within the articles of operation. If you do not quite trust the partner, then retain counsel to draft it for you. usually you can draft it yourself with templates you can find online, but as you and your potential partner do not really see eye to eye, a mutual consult with an attorney may be a good investment in your particular situation. Otherwise you may be looking at an expensive dissolution and break-up down the line if the expectations do not align between you and your partner.


Hope that helps.

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