Unit Value After a Withdrawal

Laurie Frederiksen on

Yes. That is correct. When a member withdraws, the number of units changes, but the unit value doesn't.

The total valuation of your club would drop because there aren't as many units after the withdrawal.

Laurie Frederiksen
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On Fri, Jun 20, 2014 at 2:21 PM, John Rice wrote:

When a member does a full withdrawal does the unit value stay the same but the number of units are reduced? This past year we had 3 members leave the club which reduced our valuation by almost 10%.

John Rice
ABODI Investment Club

Jim Thomas on

> Yes. That is correct. When a member withdraws, the number of units
changes, but the unit value doesn't. <

Agreed.

> The total valuation of your club would drop because there aren't as
many units after the withdrawal.

I think saying it that way confuses cause and effect.

The reason that total valuation of a club drops after a withdrawal is
because the club has fewer assets (total valuation has nothing to do
with units). The reason unit value doesn't change after a withdrawal
(even with fewer assets) is because there are fewer units (the units
owned by the withdrawing member no longer exist).

-Jim Thomas

Rip West on

> Yes. That is correct. When a member withdraws, the number of units changes, but the unit value doesn't. <

UNLESS, a withdrawal fee has been applied. In that case, the unit value increases.

Rip West

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