What is the process for selling an LLC to another individual?

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What is the process for selling an LLC to another individual?

I want to sell my LLC to another individual. Does the debt transfer? Should I
close the company first and just sell the assets? Can I do a straight transfer of
ownership?

Asked on June 5, 2017 under Business Law, North Carolina

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

You sell with a simple contract of sale, the same as you could sell a used car or a home or anything else you own.
You legally could sell the LLC itself or you could sell just the assets--both are equally legal and common. The LLC remains liable for its own obligations and debts; on the other hand, it also will still be owed any amounts (like accounts receivable or licensing fees) owed to it; and any contacts with the LLC remain in effect so long as the LLC exists. So whether to sell the LLC itself or just the assets is a decision for the seller and buyer to work out--what can they agree on? What makes sense for both of them? Does the buyer want the contracts and receivables--then buying the LLC makes more sense. (You can sell the receivables and assign contracts without taking over the LLC, but its simpler in many cases to just buy the LLC and get everything as one package.) Or does the buyer only want the assets, and/or is the LLC very debt burdeneed in which case you may wish to only do an asset sale and let the LLC close in the future. Does the buyer have an existing LLC or corporation under which to run the business, or does he have a desire to acquire such a "corporate" entity? Etc. The sale can be structured however works for both parties; just factor in all tangible and intanglible assets, all debts and obligations both owed to and owed by the LLC, and contracts in place, and decide what works best.


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