LLC Agreement (Private Equity): Buy-Sell Provision | Practical Law

LLC Agreement (Private Equity): Buy-Sell Provision | Practical Law

A buy-sell provision (also referred to as a "shotgun clause") to be included in a limited liability company agreement for a private equity holding company that can also be adapted for use by a limited partnership or corporation. This buy-sell right allows a member to offer to either buy the other members' membership interests or sell its own membership interest to the other members at a stated price, and allows the other members to choose to participate on the buy side or the sell side. This Standard Clause has integrated notes with important explanations and drafting and negotiating tips.

LLC Agreement (Private Equity): Buy-Sell Provision

Practical Law Standard Clauses w-002-6451 (Approx. 12 pages)

LLC Agreement (Private Equity): Buy-Sell Provision

by Practical Law Corporate & Securities
Maintained • USA (National/Federal)
A buy-sell provision (also referred to as a "shotgun clause") to be included in a limited liability company agreement for a private equity holding company that can also be adapted for use by a limited partnership or corporation. This buy-sell right allows a member to offer to either buy the other members' membership interests or sell its own membership interest to the other members at a stated price, and allows the other members to choose to participate on the buy side or the sell side. This Standard Clause has integrated notes with important explanations and drafting and negotiating tips.
On August 23, 2023, the SEC adopted new rules under the Investment Advisers Act of 1940 for private fund advisers (see Legal Update, SEC Adopts New Rules for Private Fund Advisers) (the "New Rules"). The New Rules are generally effective 12 to 18 months after publication in the Federal Register and will have a material impact on limited partnership agreements for private equity funds and may require revisions to this resource. Updates are planned in the near future. For more information on the final rule, see Private Fund Advisers; Documentation of Registered Investment Adviser Compliance Reviews, Fed. Reg. 88 FR 63206 (Sept. 14, 2023).