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What is a buy-out?

A buy-out allows a member, who has withdrawn from a company, to distribute that member’s ownership percentage.  The first option for a buy-out is for all members to buy the remaining ownership together.  In this case, the remaining members will pay an equal amount of the withdrawn member's contribution and will receive an equal percentage of ownership in return.

The second option would be if, for some reason, all members do not agree to buy the shares together. In that case, another period of days will be given for a single member to buy the shares on his/her own.  The single member would pay the entire amount of the withdrawn member's contribution and will receive all of their ownership percentage in return.  

The time period allotted for each is defined by the Operating Agreement.  If a buy-out is not achieved by the end of the second period, the LLC is automatically resolved.

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