Workable Appraisal Process for LLC

I offer LLC owner/members a detailed and workable appraisal process provision for the determination of LLC value. I draft the provision myself. Appraisal processes are many and varied and can be time and money traps. Every LLC Operating Agreement should have a workable appraisal process provision because no matter what other buy-out methods are included there are always scenarios where expert appraisers will be needed to determine value.

Further, if the matter is not addressed in the LLC Operating Agreement, the South Carolina Statutory Default Rules control and the LLC will use the statutory appraisal process where the experts are to determine “fair value” without a statutory definition of “fair value” and arguments among LLC owner/members are to be settled by the court. When I organized “Form” LLCs whether the LLC Operating Agreement used the statutory appraisal process or not depended upon which “form” I used.

Now that I draft my own LLC Operating Agreements, I offer a number of buy-out provisions and always recommend this one be included.

“In some instances homemade pies are superior. Wills never.” Judge Roy M. Page, Matter of Douglas, 195 Misc. (N.Y.) 661, 662 (1949).