Michigan service companies: selling control and keeping a stake

For a Michigan owner thinking about selling control of a service company and staying on, the state details are short. The work is in the deal terms. Here is what to check with the state, and what to settle with a partner.

Michigan's 2026 income tax rate

The individual income tax rate for the 2026 tax year is 4.25%. The Department of Treasury confirmed on April 15, 2026 that the formula that can lower the rate was not triggered this year (Michigan Department of Treasury). Use that as a starting point with your CPA, who will look at how the sale, any later payments and the rolled stake are treated as a whole.

Good standing with LARA

The Corporations Division of the Department of Licensing and Regulatory Affairs issues certificates of good standing, ordered online or by phone (LARA Corporations Division). If your LLC has fallen out of good standing, for example over missed annual statements, it must be restored before a certificate can be issued, which means filing the past-due statements and fees (LARA: restore an LLC). Check this months before a deal, not the week of closing.

What "selling control" means

A controlling partner elects the board, approves the budget and decides when to sell again. Federal law presumes control at the right to vote 25% of a class of voting securities, for the deals M&A brokers may handle without registering, and requires that the buyer be active in management (15 U.S.C. 78o(b)(13)). That is the deal we advise on. We do not arrange minority investments or growth-capital raises; if one may fit, we can refer you to a registered broker-dealer.

Settle these with a partner, in writing

• Your role. Title, duties, pay and term after closing.
• Your stake. Its size, its class and what is paid ahead of it.
• If you leave. Whether the company can buy the stake back, and on what formula.
• The next sale. When the partner plans to sell, and whether you must sell with it.
• Your people and your name. Pay plans, who keeps which job, and how long the brand stays on the trucks.

Our article what an equity partner expects after you sell control goes through each of these, and rollover equity in plain English explains the stake itself.

Retained ownership and future upside are possibilities, not promised second paydays. Rolled or retained equity is usually illiquid, often a minority position behind acquisition debt, and can lose some or all of its value.