In a limited liability company (LLC), each owner (referred to as a “member”) has a membership interest in the company. A membership interest refers to each member’s percentage of ownership.
When an LLC is sold, the members of the company must transfer their membership interests to the new owner. In this article, you will discover the steps involved in the sale of a Florida LLC.
How Do I Sell My LLC in Florida? – Step-by-Step
Reviewing the Operating Agreement
The operating agreement is the document that outlines the financial and functional structure of an LLC.
The transfer of business ownership often occurs through a buyout or buy-sell procedure specified in the document. If an LLC has no operating agreement, Florida law has statutory rules to conduct the process.
Assessing the Value of the Business
The next step is to work with an experienced business attorney to assess the value of the business. Depending on how the company was formed, the transfer of ownership may occur in distinct ways.
It is possible to transfer ownership of a single-member LLC using a bill of sale, selling the owner’s interests for an agreed sales price. Conversely, transferring membership interests in multi-member LLCs may be a more complex task.
For example, LLCs members may create an operating agreement to maintain the business value at a certain amount, or certain members may disagree with the sale based on rights of refusal.
Once the members have consulted with an expert attorney to guarantee everything is in place for the sale, they can search for prospective buyers. After filtering the best offer, it is possible to negotiate a price both parties can agree on.
Members of Florida LLCs tend to look at comparable businesses recently sold in their area to identify the amount paid for them.
Upon submitting a Letter of Intent (LOI) with a commitment to buy the company, the buyer may want to proceed with due diligence by examining the company’s books and other similar actions.
Depending on the situation, the buyer may want to purchase only the LLC’s assets instead of buying the company as a whole.
Preparing the Paperwork
Once the negotiation is over, it is time to work with a Florida business attorney to:
- Figure out the tax consequences involved in the transaction
- Prepare the business for the sale
- Draft and review the necessary documentation
- Handle tax liabilities and file the required paperwork with the IRS
When preparing the business sale agreement, it is crucial to consider:
- The list of the assets involved in the sale
- The value of each asset involved in the sale
- Whether the buyer will acquire the entire entity or only its assets
- The acquisition of intangible assets (e.g., trade secrets, customer lists, proprietary information, etc.)
- The existence of non-compete clauses
- Which assets the members might keep for themselves (e.g., vehicles, machines, etc.)
- The payment terms
- Payment protection clauses
- Whether the buyer will put down a down payment
- Whether the buyer will use financing or pay the sales amount in installments
- Whether the buyer will assume any of the company’s existing contracts
At the closing, the parties must sign the documentation to transfer ownership of the business to the new owner. During the meeting, the new owner may receive some of the items involved in the sale, such as business keys, customer lists, alarm codes, etc.