Purchase of LLC Interest in Connecticut, USA

Question

I currently own 30% of an LLC in the state of Connecticut, USA. The LLC currently has a total of 2 members, meaning another person holds the remaining 70% which I would like to purchase.

Where could I find a template of a legal contract to purchase the remaining membership interest? I have looked online for a while now, but most of the contracts that I find refer to the company as a Corporation and membership interest as stocks, which makes me believe that the contract applies to a different type of company, INCs for example.

If the best thing is to get a lawyer involved, about how much would this cost? Is there a site that I can get in contact with a lawyer and do the whole transaction online (this site for example)?

Thank you.

Answer 1

Short Answer

Over $10k? Hire a lawyer. (They're well worth the money in this case.)

Explanation

If I were you and the total value of the shares you're going to purchase is, say, over $10,000, I would definitely have a lawyer draft all of the paperwork for you. And handle the closing of the sale.

There are legal issues involved in the sale of closely held equity that you would never think of. And it can get downright nasty, messy and expensive if you and your partner ever got in a major disagreement down the road. Say with some (contingent) liability or other loose end that you never thought to address at the time of sale. Say, a personal guaranty, for example.

You could probably get a lawyer to do this for you for right around $1,000 or less (depending upon how good your current LLC documentation is). If that's the case, and the LLC has any significant value, the cost of the $1,000 in legal fees is well worth what it will save you in the long run if you screw up anything and you and your seller later fall into a dispute.

Hiring the lawyer will have the additional benefit of putting you in a better position for your CPA to deal with the tax consequences of the sale. Because the paperwork will be complete and accurate. That will save you even more money in CPA fees for tax compliance.

I say all this from the perspective of someone who has done lots of this before. And I also am no fan of paying legal fees when it's not necessary. But this is a case I would definitely say hiring a lawyer is well worth the money.