Buy-Sell Agreement Formation
WHY YOUR LLC NEEDS A BUY-SELL AGREEMENT
The Law Office of Eric J. Proos, P.C. Explains the Importance of a Buy-Sell Agreement
The California Corporations Code does not require that a multi-member Limited Liability Company, LLC, have a buy-sell agreement. However, when two owners contribute money and sweat equity, it is ideal to have it laid out, in writing, how a person may leave the Limited Liability Company, LLC, when the time comes. Most law firms incorporate a buy-sell agreement within the operating agreement, and there is nothing wrong with that. The Law Office of Eric J.Proos, P.C., prefers two separate agreements so the owners are not burdened with reviewing a 50-page document.
Call Los Angeles Business Attorney, Eric J. Proos, to discuss why your multi-member Limited Liability Company, LLC, should have a buy-sell agreement.
What is a Buy-Sell Agreement?
A buy sell agreement is an agreement between the owners of a Limited Liability Company, LLC, that dictates how an owner’s equity will be transferred, sold, valued, the Limited LiabilityCompany’s, LLC’s, role, the other owner’s rights, and events that may trigger equity to be sold. The following is a non-exhaustive list of provisions included in an LLC buy-sell agreement:
- Dissolution of the Limited Liability Company, LLC;
- Restriction on transfer of equity;
- Voluntary sales;
- Involuntary purchase;
- Optional purchase on breach of agreement;
- Purchase on Death of owner;
- Mental Incompetence;
- Purchase on Disability of an owner;
- Conviction of a crime;
- Retirement; and
- Failure to perform duties;
It is best to think about how a Limited Liability Company, LLC, will handle the aforementioned events before the events occur. Having a buy-sell agreement at the outset saves a lot of time, money, and stress down the line. Consult with competent, experienced counsel at the formation stage of your Limited Liability Company, LLC, to ensure that all formation documents and agreements are handled properly.
The Law Office of Eric J. Proos, P.C., is here to help your Limited Liability Company, LLC, with its formation, and its buy-sell agreement. Give Eric Proos, a Los Angeles Business Attorney, a call today to discuss your LLC.