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Taking Over Current Business Name - LLC Transfer?

770 Views | 5 Replies | Last: 1 yr ago by Stat Monitor Repairman
Robin Sparkles
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I am looking at taking over an existing business name. The current business structure is an LLC with 3 officers. There are no assets to the business to worry about. I want to keep the name and continuing the business so that it appears seamless to the public. The current LLC holder and officers are in agreement to transfer, I just don't know what to recommend as the best way to do this. They've offered to either transfer the LLC or file the LLC as inactive and let me start a new one with the same name. Anyone have any guidance or pros and cons of each?
fka ftc
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I would have a lawyer advise on this specific type of deal.

Old LLC could rename and you could register new LLC. If they have filed dba's in certain counties, then I assume there is a process to rescind that and for you to file.

But, I think a lawyer would tell you to have an agreement and a "sale" of the IP rights of old business to new business.

When I split from my partners a few years ago (agreeable, amicable), we drew up a document to cover my use of the name, materials, lans, concepts, etc and they "sold" it to me for a dollar or some nominal amount.

But again, it would be worth a lawyer here. In business, people are agreeable and friendly until they are not. Always, always paper it up.
"The absence of the word accountability is not the same as wanting no accountability" -unknown

"You can never go wrong by staying silent if there is nothing apt to say" -Walter Isaacson
WoMD
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Does the public know the business by the LLC name? Not a DBA? You could name your entity "I'm a useless scam artist who wants your money llc" and it's not what the public sees (at least not openly). The DBA is what the public sees, and that doesn't need to have anything to do with the corporate name.

Personally, I'd form my own entity and DBA the business name for the public to continue to use. That's what I did with my business, and when I sold it the new owner did the exact same thing. Keep it simple.
Agilaw
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AG
I agree on not purchasing the LLC with the facts as given as there is no FFE, real property, accounts, inventory, etc. to transfer. You might want to ask to see a copy of the operating agreement for the LLC to make sure the sale procedures are being followed properly. You are basically purchasing the goodwill/name of the LLC. If the LLC is operating under an assumed name with the State of Texas, that would need to be discussed and properly documented too. If there is any concern with the LLC owners/members popping up in business again near you and/or using the same name or a similar name as the one you are purchasing, you could consider a non compete being executed too.
BizBroker97
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AG
Given what you said above, here are some thoughts ...

Based on the assumption that you aren't taking over an operating business here (since you said there are no assets), but you still want to own the LLC, you'll need to purchase 100% of the membership interest from the current owners - it's considered a stock sale, as opposed to an asset sale where you would be buying the assets of the LLC from the LLC. The primary risk with a stock sale vs. an asset sale is that you are potentially acquiring all of the known and unknown past, pending, threatened and future liability the current owners may have. That's not to say you shouldn't pursue acquiring the LLC, it just means you have top make certain your attorney draws up a purchase agreement with all of the standard representations and warranties that indemnify you from these potential legal risks.

Another option would be to have them dissolve the LLC and then you can register it as a new entity. This could take anywhere from a couple of weeks to a couple of months to be completely resolved. But the bigger question with this strategy is to understand your motivation for wanting the LLC in the first place. If it's simply to own the name because there is some value in that in your marketplace, that's OK. But if it's because there are some customer contracts, vendor agreements or other contractual arrangements the LLC has that you want to have yourself, this strategy won't work - even though the LLC name doesn't change, the EIN will, and that will trigger the necessity for a new contract, agreement, etc., with the party you were hoping to seamlessly assume.
jeremy@northstar-mergers.com
214.442.6706
Stat Monitor Repairman
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Quote:

and let me start a new one with the same name
SOS will do a name check and kick it back if there's and entity with the same or similar name. Yes, you can try and dissolve the existing entity and re-register the same name but there's a good chance that will somehow **** up and cause delay. I'd look at forming new with clean slate.
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