Membership Interest Purchase Agreement
(CO LLC)

Summary

This is a template for a membership interest purchase agreement that is for use in a transaction where a member of a Colorado limited liability company is selling its membership interest to an arm's length buyer, who becomes a member of the company by assignment. This template contains practical guidance and drafting notes. This template is generally applicable without regard to industry; however, the specific nature of the assets of the company in which the membership interests are being acquired should be considered when preparing this template, and additional industry specific representations added as needed. Membership interest purchase agreements are generally prepared by the buyer's counsel, as such, this template is generally pro-buyer, but also includes drafting guidance for the seller. This template contemplates one member selling 100% of its interests in the company while there is still an additional member of the company. If the sale of the membership interests in the company is resulting in the sale of the company and being used as a structure to acquire an operating business or an asset sale, see Membership Interest Purchase Agreement (Long Form) (Pro-Buyer) (DE), which may be adapted for the sale of a Colorado limited liability company. The Colorado Limited Liability Company Act (CO LLCA), Colo. Rev. Stat. § 7-80-101 et seq., provides the default terms of formation, operation, dissolution, and other governance matters for limited liability companies in the absence of an operating agreement. The CO LLCA recognizes a member's ability to transfer the right to receive distributions. See Colo. Rev. Stat. § 7-80-702(1). However, a member generally cannot transfer the entire membership interest, including the right to manage and vote, without the consent of all the other members. See Colo. Rev. Stat. § 7-80-701(1). These transfer rights are subject to the terms of the operating agreement. It is important for counsel to review the terms of the operating agreement and other governing documents of the company to confirm the necessary internal approvals for this sale of the membership interests contemplated by this agreement have been obtained. For a template operating agreement for a Colorado limited liability company, see Operating Agreement (Member-Managed, Multiple Member) (CO LLC).