QUESTION
How do you come up with a selling figure for a business that you own a third of?
Asked on Jul 28th, 2012 on Business Law - Florida
More details to this question:
I own a third of a LLC with two other partners. We have all invested roughly the same amount in our first two tax years. I have however invested much more time and effort into the business including: designing the logo, creating our slogan, writing the content for our website, photography, and concept for the website design, layout for the design of our business, and created the marketing materials. I have too many contributions to list. We never had an agreement in place in the beginning, there is one now that has not been signed or agreed upon. I have been told two different tales, one that says I can ask for whatever I want to sell my portion for and another that says I can only ask for the actual sum I contributed. I have done a lot of jobs that would have required large amounts to be paid out to various professionals. I believe I should be "paid" through my selling amount. Is this something you can get credit for or include in your value you put into the business?
1 ANSWER
Probate & Trust Attorney serving Sarasota, FL
at
Christopher K. Caswell, P.A.
Update Your Profile
Valuation methods depend on the purpose of the valuation and any third parties affected by the valuation. It is more of an art than a science. You can start with a company CPA, and you can also get a business valuation expert involved. Unfortunately, you don't have an agreement about how the valuation is to be made for any purpose, so there will have to be a lot of dialogue and negotiation and compromise. But first, try to determine the specific purpose for the valuation. Remember that if you are basing your ownership interest as 1/3d of the LLC, you are valuing the LLC and then you interest is valued at 1/3d of that. The fact that you have extra sweat equity would not change your valuation, unless you were able to change your 1/3d ownership interest. Extra value can be distributed to you on agreement of all owners for any services or added value your provide in the form of a priority distribution or bonus, etc.
Answered on Jul 31st, 2012 at 11:11 AM