Business Succession Planning
Minimise the impact of disruption to your business during a tough or turbulent time — because you will be prepared.
Business Succession Planning protects your business from the impact of a partner, shareholder or key person's departure. Their departure may be voluntary — for example, due to retirement or disharmony; or involuntary — for example, due to illness, injury or death.
Think of Business Succession Planning as a Will for your business, with an insurance overlay that financially protects it should such an unfortunate event take place.
Picture this:
Your business partner exits your business involuntarily. How will you fund the payout to them or their estate?
A person integral to revenue generation in your business, departs suddenly (due to illness, injury or death).
Your business partner passes away unexpectedly. Their disinterested (and unskilled) spouse is your new shareholder.
These are difficult circumstances to consider. But with proactive planning, you will have the right strategy in place, as well as adequate funds, to take on the resulting challenges.
Our team will support you and your business partners to navigate a mutually agreed solution and provide the means to reduce any financial stress.
Business succession planning is comprised of two specialist strategies:
01
Buy/Sell Agreement
If your business experiences a 'trigger event' placing its ownership and fluidity at stake, you need to be prepared. This could be the unexpected death or permanent disablement of an owner, which would call for the transfer of ownership to the remaining partners.
If such an unfortunate situation occurs, you will need to raise funds to purchase the departing partner's share. This is where a buy/sell agreement comes into play.
A buy–sell agreement is a legally binding agreement between co-owners of a business that determines the situation, including transfer of ownership, if one owner dies or is forced to exit the business.
A buy/sell agreement is typically funded by the outgoing owner's life insurance. Think of the buy/sell agreement as the estate plan or 'business will' for your company, and the insurance proceeds as the assets of the estate.
02
Key Person Insurance
Key person insurance is a policy taken out on an individual in your business, whose absence would create commercial adversity. The 'key person' is typically a business owner or senior executive who is pivotal to the running and commercial success of your business.
Should the key person become ill, disabled, or pass away, the policy protects against income and profit loss, assists with debt reduction, and ensures the business continues to run smoothly during this turbulent time.
It allows everyone in the business to breathe, and have time to recover.
The business pays the premiums for the key person insurance and is the policy’s beneficiary in the event the person can no longer work.
