When you go into business with another person you are embarking on a very special kind of relationship. Whether that person is your best friend, a trusted co-worker, a family member or someone you have just met, relationships change over time and sometimes that leads to a business breakup.
Business breakups range from the amicable to the ferocious. They can be the result of deep-rooted disagreements, life changes such as divorce or retirement, or the desire to pursue new opportunities.
But one thing is certain, if you include clauses that govern how a member may leave or be removed from the LLC in your operating agreement and/or member agreement, the breakup will probably be smoother, less disruptive, and cost you less in legal fees.
What is an operating and/or member agreement?
An operating agreement and/or a member agreement is a contract between an LLC's members that determines members' rights, powers and entitlements. Because this document may set forth the procedures for a buyout and for removing a member, it should be drawn up as early as possible in the process, and it must be signed by all the LLC's members.
At McQueen Awad LLC, we have helped a wide variety of companies create agreements that have helped members navigate their business relationships. You and your business are unique, so your agreement is unique too. We tailor it to fit your needs.
Don't sign it and forget it
To ensure the document remains relevant, you should plan to review it at regular intervals. Reviews should be scheduled for every five years or they could be triggered by events such as reaching a milestone for example a revenue achievement or number of employees.
