Statement of Agreed Value

A statement of agreed value is a predetermined price per unit of an LLC, as agreed to by the interest holders, for use in the event of a future transfer in ownership or the need to establish the value of units. The statement of agreed value is usually attached as a short one-page exhibit to the operating agreement of the members of the LLC. There are multiple ways to establish the value of units in an LLC, particularly after the company has started operating and realizing revenues. The statement is a simple way to determine that value at founding. If the statement is used by members of an LLC, then, in theory, it should be periodically updated from time-to-time, and at least annually, so that the value of the units is always as accurate and up-to-date as possible. However, most owners of LLCs make updating the statement of agreed value a low priority and it is rarely up-to-date when an event occurs that would make it valuable and needed. Such an event is if an owner in the company chooses to be bought out and wants to establish a value for the units owned by that person. If the statement of agreed value isn’t updated, then other methods, such as an outside appraisal, must be used, assuming the members can agree upon that.