Sale of LLC Membership Interest: An Informative Guide

Every equity owner of an LLC is called a Member and they own a percentage of the company. If one of the Members wants to sell their ownership interest to a buyer, they can do this through a sale of an LLC membership interest agreement. In this blog post, we will discuss important points to know about selling an interest in an LLC so that when the time comes for you to consider it, you have the information necessary to sign a great deal.

What Does an LLC Membership Interest Bill of Sale Include?

If you decide to sell a percentage of ownership in your LLC, you can do this through an Assignment of Membership Interest. If you are the single member of the LLC, you can sell interest for any amount you wish. In LLCs with multiple members, there usually are specific rules in the Operating Agreement that set a procedure for transactions and value for the LLC. Nonetheless, here are terms that are included in an LLC membership interest bill of sale:

• Name of the LLC;

• Value of the membership interest;

• The percentage of ownership that is being sold;

• The seller’s name and signature;

• The buyer’s name and signature;

• The signature of all LLC members;

• Dates of all signatures;

• A statement from the buyer that confirms they are ready to take all member responsibilities;

• A statement that specifies interests are sold as they are without any other guarantees;

• A statement that shows LLC membership interests are free of encumbrances;

• A statement that requires the signatures of all current members.

Can You Sell Partial Membership Interest?

The members involved in an LLC can choose to sell partial equity interest. Each member owns a percentage of the business and can add new members after receiving unanimous consent from the existing ones. In general, the rules of selling a partial interest in an LLC will be determined in the Operating Agreement created by an attorney when the business was started. If the Operating Agreement doesn’t specify a procedure and rules for selling partial membership interest, it’s a good idea to hire a business attorney to provide guidance in compliance with your state’s laws. In some states, the dissolution of the company is required if there doesn’t exist a buy-sell agreement.

How to Sell Membership Interest in an LLC?

The first step to selling membership interest in an LLC is to read the Operating Agreement of your business. The Operating Agreement will specify the detailed process of transferring membership interests. Below are some of the most common stipulations found in LLC Operating Agreements:

• The agreement can dictate the exact value of the interest;

• The agreement may require unanimous consent of all members before making a sale or transferring partial interest;

• The agreement can give the other LLC members the right of first refusal.

Are you looking for help with the sale of an LLC membership interest? If that is the case, you should hire professional counsel. Depending on your LLC’s Operating Agreement and state laws, we can determine the best way to sell membership interest so that the deal accomplishes your goals.