Should You Buy the Farm or Just the Cows? Comparing Asset and Membership Unit Purchases for LLCs

When it comes to purchasing an LLC, there are two options to consider: an asset purchase or a membership unit purchase. While both options might seem similar, there are some key differences that business owners need to be aware of before making a decision.

In an asset purchase, the buyer purchases the assets of the LLC, such as equipment, inventory, and accounts receivable. The LLC itself remains intact, and the buyer can choose which assets they want to acquire. This option allows the buyer to pick and choose what they need, and they can leave behind any unwanted liabilities.

On the other hand, a membership unit purchase involves the buyer purchasing the actual ownership interest in the LLC. This means that the buyer takes on all the assets and liabilities of the LLC, as well as any legal obligations or potential lawsuits that the LLC may face.

There are some advantages and disadvantages to both types of purchases. An asset purchase allows the buyer to avoid taking on unwanted liabilities, and it can also provide a more flexible option for buyers who are only interested in acquiring certain assets. However, it also means that the buyer has to establish a new LLC and obtain new permits and licenses.

A membership unit purchase, on the other hand, provides the buyer with an established business entity with existing permits and licenses. It also means that the buyer takes on all the assets and liabilities of the LLC, which can be a disadvantage if the LLC has significant liabilities or potential lawsuits.

Before making a decision on which type of purchase to pursue, it's important to consult with a qualified attorney who can help you navigate the legal and financial implications of each option. At our firm, we specialize in providing legal counsel to business owners, and can help you weigh the pros and cons of each option to make an informed decision.

Whether you're looking to purchase the assets of an LLC or the membership units, our experienced attorneys are here to help. Contact us today to schedule a consultation and learn more about how we can help you protect your business interests.