# How to determine the value of an llc

2

I have a two-part question:

1. I need to know how to determine how many membership units should be issued for each member, including a new member.
I have an LLC with three members. Each member contributed the following: Member A, \$30k for 75% interest, Member B, \$15k for 5% interest, and Member C, \$20k for 20% interest in the company. If a new investor comes in and contributes \$200k for 35% interest, how many membership units should be issued to him w/o Member A losing control (less than 50% interest)?
1. How do I determine the value of the LLC? Is it merely the amount of capital contributed?

2

Ignoring the capital each member contributed and just going by the percentage of the membership each existing member has an interest in, if you are allocating 35% of the company to a new investor then each existing member needs to be scaled back by 35%.

That means A would get 48.75%, B would get 3.25% and C would get 13%. Add those to the new investor that has 35% and you're upto 100%. I don't see any other way of doing it if you are basing it on percentages.

This way member A would end up with less than half the company if you give away 35% of the company regardless of how much the new investor puts in.

-1

without revenue - your capital contributed is the only means by which you could clearly base a valuation. however there are several ways to assess a member's value. i suggest reading through Dan Shapiro's thoughts here - http://www.geekwire.com/2011/wrong-answer-5050-calculating-cofounder-equity-split - for some creative rationale.

if you do have revenue - 10-15x of rev is an acceptable valuation. So \$10K in rev becomes a company valued at \$100K to \$150K + \$65K Founders + \$200K investment = \$365 - \$415K total value. New member should get 54% - 48% in this case.