Q: Hello, I am interested in merging two LLCs. Is this possible?
Thank you to one of our customers for a great question! An LLC merger is when two (or more!) LLCs combine to form a single LLC. While the exact process of merging may vary from state to state, here’s how it typically works.
Step 1: Create a Plan of Merger
According to the Uniform Law Commission’s Limited Liability Act, versions of which have been adopted by 19 states and the District of Colombia, the first step to merging LLCs is creating a plan of merger. This plan should be drafted by members of both LLCs.
Before drafting your plan, you’ll need to know if your LLCs are combining to form a new LLC or if one LLC will absorb the other. Either way, the LLC resulting from the merger is referred to as the “surviving” LLC.
Your plan of merger should contain:
- The name, jurisdiction of formation, and entity type of each original LLC.
- The surviving entity’s name, jurisdiction, and entity type.
- Information on how the interests of each party will be converted to the surviving LLC and in what form (money, property, etc.).
- If the surviving LLC existed before the merger, any proposed amendments to its public or internal records (for example, its articles of organization and operating agreement).
- If the surviving entity will be a new LLC, the new articles of organization and new operating agreement.
- Any additional provisions required by your jurisdiction.
- Any other provisions that your LLCs’ members wish to add.
Step 2: Approve the Merger
Once your plan of merger is completed, all LLCs involved must approve the plan. Depending the rules laid out in your LLCs’ operating agreements, this could look different for each LLC. However, generally speaking, the members of each LLC must convene and vote to approve the merger.
Step 3: File a Statement of Merger
After you have every aspect of the merger ironed out internally, you’re ready to make your merger official with the state. That means filing a statement of merger.
Your statement of merger should include:
- The name, jurisdiction of formation, and entity type of each LLC that will not survive the merger
- The name, jurisdiction of formation, and entity type of the surviving LLC
- A statement that the merger was approved by all LLCs involved
- Any amendments to either LLC’s original articles of organization and operating agreement OR your new articles of organization and operating agreement
- Your plan of merger, signed by the members of all merging LLCs
- Any additional provisions required by your jurisdiction
- Any other provisions that your LLC members wish to add
Depending on the state, you may need to pay a filing fee when you submit your statement. Fees vary by state. Once the state has approved your statement of merger, you’re ready to go!
Step 4: Dissolve Original LLCs and Register New LLC
Finally, you’ll need to dissolve all non-surviving LLCs by submitting statements of dissolution to the Secretary of State or other agency in charge of business registration where your LLCs are located. This will officially close these businesses.
If your surviving LLC is a new business entity, you’ll need to file new articles of organization to officially register your new LLC with the state and legally start doing business.
Steps to Take After You Merge LLCs
When your LLCs merge, you are either absorbing one LLC into the other or creating a whole new LLC. That means you’ll need to inform everyone you do business with of this change. Here are some steps you’ll need to take:
- update or change bank accounts
- contact your vendors
You may also need to appoint a new registered agent if you won’t be keeping the one of the registered agents from the original LLCs as the registered agent of the surviving or new LLCs.
Do I need a new EIN when I merge LLCs?
It depends. If one of your original LLCs will continue to exist as the surviving LLC, you can continue to use that LLC’s EIN. However, if you form a new LLC, you’ll also need to get a new EIN because you’ll be operating as a new business entity.
Best of luck!