Question: “We will be wanting a buy-sell agreement since none of the members of the LLC are related. However, after doing some research online it seems as though there are many customizable template type versions available for free. My question to you is concerning your pricing. You charge $500 for your Buy Sell Agreement when you form the LLC, yet it seems after reading through it all that it is just a template that you give everyone that purchases it and we essentially change it according to our needs (very similar to the free ones available online). Can you help me understand where the value is with your buy-sell agreement when purchasing with the LLC startup?
Answer: My Buy Sell Agreement is the product of my 31 years of experience as a business lawyer forming thousands of companies and dealing with the problems that arise between members/owners. It started as a limited partnership agreement I first created in the early 1980s. When Arizona adopted its LLC laws, I modified my limited partnership agreement to be an Operating Agreement for AZ LLCs. In the early 2000s I made substantial revisions to my standard LLC Operating Agreement that was about 45 pages and also created an Operating Agreement / combined Buy Sell Agreement that was about 90 pages long. During January and February of this year I spent over 40 hours splitting my 90 Operating Agreement with buy sell provisions into two separate documents – the Operating Agreement and the Buy Sell Agreement. I did a lot of research including buying Howard Zaritsky’s book called “Structuring Buy-Sell Agreements: Analysis with Forms” for $295. I incorporated a lot of his content into my new 35 page Buy Sell Agreement. You can purchase the book here.
I’m sure I have spent over 200 hours on my Buy Sell Agreement over the last 31 years. Most attorneys would charge $1,500 to $3,000 for a Buy Sell Agreement that would not be as good as mine. I can charge less because I use automatic document assembly software to create my documents and I do a high volume. Most business attorney’s don’t do one Buy Sell Agreement a month. I’ve spent over $30,000 over the years on professional programming of my automatic document assembly templates.
My Buy Sell Agreement does have optional language that the members must pick. For example, there are six different ways to value the interest of a selling member. Your members must read the six methods and decide which method is best for the group. The group may want to modify their selection. How many valuation options do you think you will get from your free form? Will it contain drag along and tag along provisions? Is the free or cheap form you get from the internet Arizona state law specific? If you needed surgery, would you want a doctor to do it or somebody who doesn’t tell you their name or experience and who advertises on the internet that they do free or cheap surgeries?
You have two clear choices:
- Get something free or cheap from a source you don’t know anything about or know the experience of the creator of the document that may or may not be drafted to comply with Arizona law, or
- Purchase a document prepared by a 31 year Arizona business lawyer for such a small amount of money that if your group cannot afford it then maybe it should not go into business together.