Legal Question in Business Law in Arizona

LLC Buyout

How Do I determine what I should pay a 20% silent LLC owner where there has been virtually no contributions form their end and where there is no operating agreement or buyout agreement in place? (*Company revenues aroune 200k proposed buyout from silent partner is 20% of gross annual revenue). I value it much less if any.


Asked on 4/07/09, 4:43 pm

2 Answers from Attorneys
Donald Scher Donald T. Scher & Associates, P.C.

Re: LLC Buyout

You should have addressed this issue when the LLC was formed. Since you have no operating agreement, there is a question which laws will prevail/control if the buyout goes to a trial.

It seems to me that this situation requires you to get an independent appraisal of the business value and then negotiate with the 20% member to buy his interest. You say he is a silent owner, but do not say what he contributed to get the 20% interest. The amount of gross revenue that the business receives, does not tell us the value of the business.

These cases demand that you get legal representation and an attorney that can help you negotiate the best deal for you, and get an agreement with the other party.

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Answered on 4/07/09, 5:17 pm
Donald W. Hudspeth The Law Offices of Donald W. Hudspeth, P.C.

Re: LLC Buyout

We can review all the paperwork involved and advise you for $375.00. We will apply this initial flat fee toward negotiations and a buyout agreement. As Mr. Scher said, in the absence of an Operating Agreement or any other agreement it will be difficult to determine what the buyout amount is and may as a result progress to trial.

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Answered on 4/21/09, 5:17 pm


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