This is a page from my book, “How I Sold My Business: A Personal Diary”
I met again with my new business lawyer late this afternoon. He said he wouldn't always be able to meet this rapidly, but he had a break in the schedule, and knew I was in a hurry. He read the pertinent parts of our business Operating Agreement, and said I needed to follow it to a tee. He's basically saying everything I already knew, but encouraging me to make it all very formal.
The first order of selling my business interest was to make a formal, written offer to the "company." That is, I need to state in very clear terms what I want to sell my shares for, put it all in writing, and address it to the company, which really means addressing it to the other Class A partners.
At this point the Company has thirty days to approve or revoke the offer, at which point I can make the same offer to the Class A partners, and they will also have thirty days to respond. Assuming they don't want to make a purchase, I can then go to the Class B partners with the same offer, giving them another thirty days. After that I can finally make my offer to outside entities.
Seeing, this, if each step really takes thirty days, we'll be into December before I can even think about talking to any outside entities. I told him I was sure that the Company wouldn't take the offer, as Jack owns the majority of the shares after me, and he's scared. If he really wants this matter to be settled he'll push the Company to reject my offer fast so I can get to the next steps.
Jack has verbally stated he won't approve the company buying my shares, and I assume he also won't make an offer as a Class A partner. David might have an interest in buying my shares, but I don't think he can afford it, and one thing the lawyer has made clear is that I can't make a different offer to David than I have to Jack.
After that, when we get to Class B owners, I've already mentioned that Cooper would like more ownership in the company, so he should be good for a few percent, and George will probably also be very interested in the opportunity. I'm not sure about anyone else, and of course I'm not sure what anyone is really willing to pay.
My lawyer (Joe) has promised to work up his part of the paperwork by the end of the day Saturday. He said he normally works Saturday, and wouldn't charge overtime for it. But, I needed to give him a solid sales price that I wanted.
One other note here: I told Joe I didn't want Jack to profit from this in any way, but I would like to find a way to sell to David and the Class B partners. He suggested I keep the price high so the Company would reject it, and after that the Class A partners might also choose to reject it. He said not to negotiate until I got to the Class B partners I wanted to sell to.
Selling LLC Class B Business Partners
He also said that once I got there I'd need to keep selling "comfort" to the Class B partners, who might be scared by my leaving. We decided that I should keep repeating these points:
- I'm not leaving until late next spring.
- I'll do whatever I can to help in the transition.
- David will pick up my projects.
- George will pick up the slack in sales engineering process.
- This is a great opportunity for everyone to increase their roles and ownership in the company, and make more money.