Q: I'm listed 10% owner of LLC that files as an S-Corp. Form 2553 lists the breakdown of ownership. The 51% partner sold
the company privately for an undisclosed price and now wants to "make me whole" by making 20 payments of $500 or $10,000 total to compensate for my 10%. That would mean the company is being valued at $100,000--equal to the salary of a current employee.
I can't accept this and hope I don't lose out. I hate to stir the pot but after 6 years of making this guy millions, while I run his books, banking, and IT department while still being expected to perform office mgmt duties as well as write contracts up when customers purchase vehicles.
Couple details: As of 9/1/23, we have gross income of $1.43 million. Subprime used car dealership that's been open for 25+ years. I am just trying to give some context on the potential market conditions and area of business that may effect these valuations. Any advice? Your time is greatly appreciated. Our EBITDA is skewed by projections of potential portfolio profits years out from FinanceCo, but subtracted as Other Misc Exp from monthly net income.
A: Your rights as a minority 10% owner are determined by the LLC's Operating Agreement and any buy-sell or other agreements. Use the Find a Lawyer tab to retain a local business law attorney to review those agreements and advise you of your options.
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