The Business Prenup most multi-member LLCs don't have.
California buy-sell agreements built around the Five Ds — death, disability, divorce, departure, deadlock. Tailored valuation methodology, right-of-first-refusal, spousal consent. The document that decides who walks away with the business.
B2 from $2,495 · B3 (with full operating-agreement restatement) from $4,495
What most multi-member LLCs assume — and why they're wrong
Most California multi-member LLCs assume the operating agreement covers what happens when an owner exits. It usually doesn't, or it does so in language that won't actually work when the moment arrives.
An operating agreement governs operations — who votes on what, how distributions are made, who has authority. A buy-sell agreement governs ownership transitions — what triggers a buyout, who has the right to buy, how the price gets set. When a member dies, divorces, becomes disabled, departs, or deadlocks with co-owners, the buy-sell is the document that decides what happens.
The Five Ds — what a buy-sell actually plans for
Death
A member dies and their interest passes through their estate. Without a buy-sell, the surviving members are now in business with a spouse, an adult child, or a probate estate that may not align with the business's needs. With a buy-sell, the interest is bought back at a defined price within a defined window.
Disability
A member becomes unable to participate in the business. The buy-sell defines what "disability" means (typically tied to a definition like "unable to perform material duties for 90+ days"), what the buyout price is, and who triggers the buyout.
Divorce
California is a community-property state. Without a buy-sell and proper spousal consent, a member's divorce can result in a court-ordered transfer of half the membership interest to the ex-spouse. The buy-sell prevents that with a forced-buyout trigger.
Departure
A member wants to leave voluntarily. The buy-sell sets the framework: notice required, valuation methodology, payment terms (lump sum or installments), non-compete or non-solicit conditions if applicable.
Deadlock
Two-member LLCs split 50/50, or four-member LLCs in a 2-2 split, hit a deadlock on a major decision. The buy-sell can include a buy-or-sell mechanism (the Texas Shoot-Out, Russian Roulette, or a more conventional valuation-based buyout) to break it.
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