Welcome to Episode 19 of Dealmaking with Laura DiFrancesco! Buying or selling a business isn’t as simple as shaking hands and signing a check. In this episode, Laura unpacks the complexities of membership interest purchases in mergers and acquisitions. She particularly focuses on the differences between corporations and limited liability companies (LLCs). The discussion highlights the importance of understanding state-specific laws, the nuances of ownership transfers, and the critical role of due diligence and governance provisions. Laura emphasizes the need for legal counsel throughout the process and outlines the various considerations that must be addressed pre- and post-closing to protect all parties involved. Whether you’re a first-time buyer or a seasoned dealmaker, if you’re in the world of M&A, this episode is your guide to avoiding missteps and ensuring a smooth transition of ownership.
What You’ll Learn
The Differences Between Membership Interest and Stock Purchases
// Learn how membership interest purchases differ from stock purchases and why the correct terminology matters in M&A transactions.
State Laws and Their Impact on Ownership Transfers
// Understand how different states regulate LLC and corporation ownership transfers and why compliance with these laws is essential.
Governance and Voting Rights in Membership Interest Purchases// Explore how economic rights, management control, and voting structures impact ownership transitions in LLCs.
Pre- and Post-Closing Steps for a Smooth Transition// Learn the essential legal and financial steps required to finalize the transfer, including document approvals, resignations, and tax considerations.
How to Navigate LLC Operating Agreements
// Understand why LLCs have more flexibility than corporations and how their operating agreements dictate ownership, decision-making, and control.
Episode Highlights:
[00:00] Introduction
[01:16] What Is a Membership Interest Purchase?
[03:32] How LLCs Differ from Corporations in Ownership Transfers
[06:12] Economic vs Management rights
[08:32] Deal Street Law Ad
[11:02] Transfer Restrictions That Impact the Deal
[12:31] The Role of Governance Documents in Ownership Transfers
[14:09] Legal Foundations Ad
[15:00] Importance Things to Consider in of Due Diligence
[18:34] Outro
Resources Mentioned
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Credits
Host // Laura DiFrancesco
Executive Producer // Teagan Rowland
Editor // Ariel Yu
Associate Producer // Ariel Yu
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