Question
I have a startup tech biz (music production software). It’s a partnership with 4 founders. Concerning the structure of our company, we’re considering a member buyout structure whereby the departing member will receive an amount equal to the their capital account verses the typical fair market value route.
Now, I realize this is not a typical way of handling a member buyout and in most cases, That would not be a favorable option, especially if there’s real estate or another assets that have appreciation, etc. However, in our case, it’s pretty cut and dry. Digital, downloadable products only. We’ve agreed that we’d rather not deal with fair market values and possible loans with this venture. If/when we sell the company, those still with the company will reap the benefit of a great sale, if one is too be had.
Lastly, we have all worked together quite some time now and feel comfortable with this structure. In light of our situation, could this work as a reasonable way to go?
Thanks!
Answer
