Category: Member Buy-outs

NEW BLOG POST BY PETER MAHLER ON DISCOUNTS FOR LACK OF MARKETABILITY

By , February 29, 2016 4:41 pm

The discussion under the link below in Peter Mahler’s excellent new blog post on discounts of the value of interests in closely held businesses for lack of marketability focuses on NY law, but its ideas apply in all states; and they are important not only in valuation litigation but also in planning and drafting buy-sell provisions in the owner agreements of LLCs and other closely held businesses.

Here’s the link:

http://www.nybusinessdivorce.com/2016/01/articles/valuation/the-dlom-debate-heats-up/#more-15668

REDUCED BUY-OUT WHEN MEMBER IS EXPELLED FOR MISCONDUCT

By , July 23, 2015 2:32 pm

The new post by Peter Mahler under the link below discusses the above subject.  In my view, all well-drafted LLC operating agreements should provide that if a member is expelled from the LLC by the other members for misconduct, the buy-out price paid to the expelled member, if any, should reasonably reflect any decrease in the value of the LLC caused by the misconduct.  All of the model operating agreements in my Wolters Kluwer LLC book so provide.  However, Peter’s post makes clear that any such provision must be carefully drafted and may generate litigation.

Here is the link:

http://www.nybusinessdivorce.com/2015/07/articles/buyout/the-hidden-cost-of-a-devalued-buyback-upon-termination-for-cause/

FAMILY BUY-OUT PROVISIONS

By , June 26, 2015 8:08 pm

Buy-out provisions in the operating agreements of family-owned LLCs are often among the most important provisions in these agreements.  The blog post under the link below, from a blog known as “Lexology,” provides some useful guidance in planning and drafting these provisions.

Here’s the link:

http://www.lexology.com/library/detail.aspx?g=f8e2d60c-4508-48e6-9107-772504e265e4&utm_source=Lexology+Daily+Newsfeed&utm_medium=HTML+email+-+Body+-+General+section&utm_campaign=Lexology+subscriber+daily+feed&utm_content=Lexology+Daily+Newsfeed+2015-06-23&utm_term=

VALUATION DATES FOR BUY-OUTS

By , June 26, 2015 12:49 pm

Peter Mahler’s blog post under the link below deals with valuation dates in court-ordered buy-outs, but many of the principles in the post apply to buy-out provisions in LLC operating agreements.

Here’s the link:  http://www.nybusinessdivorce.com/2015/06/articles/llcs/court-ordered-llc-buy-outs-whats-the-valuation-date/

QUICK AND DIRTY VALUATION WHEN IT APPEARS A BUSINESS DIVORCE WILL BE NECESSARY

By , May 26, 2015 2:25 pm

If you form LLCs, you will sooner or later be called in for legal assistance when the members of an LLC conclude they need a business divorce.  The new blog post below by Peter Mahler explains the tremendous value that a quick-and-dirty  “calculated value” business appraisal, as opposed to a comprehensive “conclusion of value” appraisal, can have in such a situation.  To read Peter’s post, click here:

http://www.nybusinessdivorce.com/2015/05/articles/valuation/5-reasons-to-get-a-quick-and-dirty-appraisal-in-business-divorce-cases/

DISCOUNTS FOR LACK OF MARKETABILITY

By , May 13, 2015 11:18 am

The link below is to the latest blog post in Peter Mahler’s excellent blog website on business divorce.  The post cites a very useful IRS manual on discounts for lack of marketability (“DLOM” which I’d never known about until I read Peter’s post), and it contains much other information about DLOM and related matters.

I’m a planner and drafter, not a litigator, but I know that Peter’s post will be useful background for me in drafting price provisions in LLC operating agreement buy-out provisions.

Here’s the link:

http://www.nybusinessdivorce.com/2015/05/articles/valuation/should-business-appraisers-rely-on-case-precedent-for-discounts/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NewYorkBusinessDivorce+%28New+York+Business+Divorce%29

BUY-OUTS

By , April 20, 2015 5:56 pm

The blog post by Peter Mahler under the link below discusses the history and the latest litigation developments in a buy-out dispute among the members of a family-owned corporation.   Peter astutely comments that the litigation might well have been avoided if only the shareholder agreement had provide for a fixed valuation date for the corporation’s business.  This comment applies equally to buy-out provisions in the operating agreements of multi-member LLCs.

Here is the link:

http://www.nybusinessdivorce.com/2015/04/articles/valuation/case-highlights-importance-of-valuation-date-in-buy-sell-agreement/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NewYorkBusinessDivorce+%28New+York+Business+Divorce%29

NEW POST FROM NY BUSINESS DIVORCE: FAIR VALUE RULING ADDRESSES A RANGE OF ISSUES

By , October 20, 2014 1:43 pm

Here is the second part of Peter Mahler’s excellent new two-part discussion of marketability discount issues and related issues in the Zelouf case, including a discussion of control premiums.

LLC UPDATES–MARKETABILITY DISCOUNT

By , October 14, 2014 1:40 pm

This latest post in Peter Mahler’s Business Divorce blog  provides an excellent discussion of the marketability discount in the context of the sale of corporate shares.  The post applies equally to LLC membership rights.

NY CASE RE INSURANCE FUNDING OF LLC MEMBER BUY-OUT

By , May 5, 2014 4:27 pm

The most recent post by Peter Mahler in his excellent Business Divorce blog is about insurance funding for buy-outs of LLCs member upon their death.  The post contains an excellent introduction to its subject matter and a discussion of a relevant recent NY case.  The lesson of the case is very simple:  If you provide for insurance to finance LLC buy-outs, record all of the details of the arrangement in the LLC’s operating agreement as an integral part of the LLC deal.  In other words, “get it in writing.”

The lessons in the case are also, of course, quite relevant to buy-out provisions in shareholder agreements.