There are many reasons why a limited liability company (LLC) might transfer ownership—a business can be sold, inherited, or even partially transferred to someone else. Here’s what you need to know about changing LLC ownership:
Check your operating agreement
Checking your LLC Operating Agreement should be your first move when deciding to change LLC ownership. Operating agreements typically outline the process for transferring ownership, or a percentage of LLC ownership. If your business doesn’t have an operating agreement, you’ll have to follow your state’s default statutes.
LLC Member Buyout
Most LLC operating agreements contain what’s known as a buyout provision, which describes the process by which an LLC or its members can buy the ownership stake of a departing member. Doing so requires valuing the LLC to determine the dollar amount associated with the departing member’s ownership stake. That’s usually followed by drafting a buyout agreement and putting it to a vote to make sure all remaining LLC members are supportive of the buyout plan.
Selling Your LLC
Selling your LLC requires finding a buyer and agreeing on a price. You’ll want to set the terms of your sale agreement in a preliminary memorandum or a change of ownership letter, then eventually draft a formal transfer of business ownership agreement to make the deal complete. Selling a business is an important transaction, so it’s a good idea to consult with a business attorney to make sure you cover all your bases.