LLC Operating Agreements for Closely Held Businesses
We draft and review LLC operating agreements for Pittsburgh businesses to define
ownership rights, management authority, voting power, and exit rules before disputes arise.
A properly structured operating agreement provides clarity, stability, and enforceable
governance for closely held companies.
Operating agreements are critical for single member and multi member LLCs, including
family owned businesses, professional practices, and real estate holding companies.
What Is an LLC Operating Agreement?
An operating agreement is the primary governing document for a limited liability company.
It establishes how the company is owned, managed, and operated, and it defines the rights
and obligations of the members.
Ownership, Voting, and Management Authority
Operating agreements define ownership percentages, capital contributions, profit and loss
allocations, voting thresholds, and management authority.
Clear governance provisions reduce deadlock and prevent disputes between members.
Operating agreements should be in place before a second member is admitted.
Once additional owners are involved, negotiating governance, voting rights, and exit terms
becomes significantly more difficult. Early planning allows members to set expectations and
avoid default statutory rules that may not reflect the parties’ intent.
Transfer Restrictions and Exit Provisions
Operating agreements often restrict transfers of membership interests and establish
rules for voluntary exits, involuntary transfers, and removal of members.
These provisions protect remaining owners from unintended partners.
Coordination with Buy Sell and Succession Planning
Operating agreements should align with buy sell provisions and broader succession planning.
When ownership changes due to death, disability, or retirement, coordinated documents
help avoid conflict and ensure continuity.
Learn more about buy sell agreements.
Is an operating agreement required for an LLC?
Pennsylvania law does not require an operating agreement, but operating without one
leaves governance issues to default statutory rules, which often do not reflect the
owners’ intent.
Can an operating agreement be amended?
Yes. Operating agreements may be amended as ownership, operations, or business goals change,
subject to the amendment provisions set forth in the agreement.
What happens if an LLC has no operating agreement?
Without an operating agreement, disputes are resolved under default law, which can lead
to unintended outcomes, loss of control, or litigation between members.
Still have questions? Contact our business law attorneys.