Whether your goal is to keep your business in the family, sell your interest to a key employee or co-owner, or prepare it to be acquired by another company, you should begin the succession planning and exit strategy process many years in advance.
If you have a business partner, and you do not have a written agreement covering succession plans for your business, the business is at risk. A written agreement between partners is essential. This type of agreement can establish what occurs if a business partner wants to sell the business, is disabled, can no longer work or dies.
WE WILL LEARN ABOUT YOUR BUSINESS AND YOUR NEEDS AS BUSINESS OWNERS’ TO UNDERSTAND YOUR PERSONAL AND BUSINESS GOALS WHEN PUTTING TOGETHER OUR RISK PROTECTION PROGRAM
We will ask each owner:
- Who would become your new business partner if your current partner died or became permanently disabled?
- If you died, would your spouse or family be able to sell your share at a fair price?
- When do you plan to retire
- Do you want to sell your business or part of your business to a co-owner, employee or someone else
- Do you want to sell/transfer the business to a family member
- When do you plan to end your involvement in the business.
WE WILL HELP YOU DEVELOP OWNERSHIP PROTECTION STRATEGIES AND STRUCTURES
This can include:
- a shareholder agreement setting out the rights and options of all parties with respect to the timing of acquisition of the shareholding, valuation of the shareholding, and any other provisions to address owners and stakeholders’ concerns
- a buy/sell agreement outlining how a business owner’s interest is dealt with if an event such as death, disablement, trauma, resignation or retirement occurs. A buy-sell agreement will protect you and your business from the effects of unexpected transfers of ownership. It also protects your heirs by giving them an opportunity to turn your shares into cash.
Jim and Con run a plumbing business employing eight plumbers. They have been working together for 15 years and the business is successful and profitable.
Then tragedy struck – although only 37, Jim had a heart attack and passed away suddenly.
Jim had left all his assets to his wife Kylie including his share of the business.
Kylie had never been involved with the business; staying at home and looking after their two small children.
Kylie needed money to pay the mortgage, support herself and her children and even though Jim and Con were good friends, she needed to sell the business.
If Jim and Con had a business succession plan and appropriate insurance cover in place, Kylie would have been looked after as she would have received a lump sum and Con would have bought Jim’s share at a pre-agreed price