How do you go about merging 2 businesses if 1 is a corporation and 1 is an LLC.?

UPDATED: Aug 29, 2014

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How do you go about merging 2 businesses if 1 is a corporation and 1 is an LLC.?

Asked on August 29, 2014 under Business Law, South Dakota


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

You have two options:

1) Business 1 buys business 2. It doesn't matter which is which--the corporation can buy the LLC or vice versa. All that's necessary is that a majority of the ownership interest of business 2 sells their ownership interest to business 1. Once business 1 owns business 2, it can do with 2 as it wants: operate it as a fully separate unit; or fold all the back-office functions together while still using 2 as a consumer-facing brand; or phase out 2 altogether over time; etc.

2) Or business 1 can buy all the assets of business 2 (e.g. customer list, intellectual property, inventory, accounts receivable, equipment, etc.) and then business 2 can be shut down or dissolved.

Buying the actual business is useful if it has lots of contracts you wish to keep, lots of good will or  name recognition, and/or may have claims it could assert in the future that the buying business would like to perhaps take advantage of.

Buying just the assets is better if business 2 has lots of obligations (whehter monetary or contractual) that business 1 does not want to take on.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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