Stephen Plotnick and Alexander Malyshev ()
It is often said that being in a business partnership is a lot like being in a marriage. When times are good, business relationships tend to be strong, with partners working together towards common goals. But like a marriage, businesses often fail due to breakdowns in the relationships among the owners. In the case of a limited liability company (LLC), an operating agreement is a lot like a prenuptial agreement—a sometimes difficult topic to discuss in the beginning of a relationship, especially for new and idealistic entrepreneurs, but an important agreement to have in place in the event of disharmony. Not having an operating agreement is akin to entering into an arranged, blind marriage—rife with potential surprises. And although the implications can vary from state-to-state, this article addresses key differentiators to be aware of, using New York and Delaware law as examples, when the members of an LLC fail to adopt an operating agreement in writing at the outset of their relationship.
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