
Ask HN: Sale of LLC Interest to Co-Founder. Advice?  - llcsale
Hey HN!<p>LONG time lurker, first time posting...<p>Well the time has come for me to move on from my start-up, and I will be selling my interest in our LLC to my co-founder (50%).  We're leaving on good terms and sale will benefit everyone in the long run.<p>My Question is does anyone have any advice? What tax implications are there?<p>We currently have just under 1M in liquid assets (Cash) and 250K in hardware.<p>I will be working with our attorney, tax advisor, and CFO but I always like to go into these meetings knowing what I want to get out of them.<p>Do you think I should bring in outside council?<p>Everything is operating under good terms right now so I really don't want to rock the boat too much.<p>Thanks in Advance.
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gojomo
You should talk to another counsel, who has only your interests in mind and
has experience with these sorts of deals, to help make sure all relevant
issues/ideas are under consideration and no avoidable mistakes are made. An
expert can think of ways to structure things that save everyone costs/worries
down the road.

But you can probably skip bringing them directly into the process, at least
until papers are drawn up.

I think it's common in such cases for the buy-out to be paid over a period of
years, if the company/remaining-investors don't have the liquidity to pay the
agreed-upon price up front.

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llcsale
liquidity of my co-founder is an interesting issue. We've discussed dissolving
the LLC all-together and porting over our TMs and other intellectual property
to a new wholly owned entity. This way we could both divvy up the current
LLC's assets in a way that is acceptable to everyone.

Ex: They would maintain possession of a majority of the hardware for example I
would get more cash based on the depreciated value of those hardware assets.

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gojomo
Assuming the business is ongoing and profitable beyond just paying managers'
salaries -- that cash balance accumulated from something, no? -- the value of
the future earnings may dwarf the current assets you're focusing on.

Or not -- depends on a lot of things including risk, margins, and so on. But
the value of a profitable business is a lot more than its book value.

~~~
llcsale
No your correct, but that is something we are going to have to work out during
the process. Current assets are a known quantity right now.

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rach
Like gojomo said, you should definitely get external legal counsel, who has
your best interest in mind. Also, the value of your startups assets are worth
the investment.

