Many businesses, whilst they develop and monitor their business plan along with protecting their property and assets through various insurance arrangements, often neglect to take the same care in considering succession issues.
Looking at your own business, have you fully considered the implications with regard to the following key questions:
* Who will control my business if I died or suffer a critical illness?
* Would my family receive the true worth of my share of the business?
* If a co-shareholder died or was critically ill, who would have control of their shares?
* Would th
Many businesses, whilst they develop and monitor their business plan along with protecting their property and assets through various insurance arrangements, often neglect to take the same care in considering succession issues.
Looking at your own business, have you fully considered the implications with regard to the following key questions:
* Who will control my business if I died or suffer a critical illness?
* Would my family receive the true worth of my share of the business?
* If a co-shareholder died or was critically ill, who would have control of their shares?
* Would the business be able to continue?
* What action would the bank take with regard to the current loan facilities?
* What impact would the loss of a key employee have on the business profitability?
These and many more fundamental questions are often ignored or put on the back burner, whilst other more pressing issues are dealt with.
The solution though is relatively simple – insurance. You take out policies on your property and other assets, so why not on the most valuable asset – you! Research completed by Legal & General in 2013 indicates that 60% of businesses do not have cover in place.
Suitable insurance arrangements, when linked with a cross-option agreement and trust document, ensure that in the event of death or critical illness, your family can receive the true value of the shares, whilst the remaining shareholders or partners can retain control of the business.
For key employees, insurance can provide the business with funds to cover a fall in profits, additional costs in finding a replacement, and where necessary , repay borrowing.
Again, research carried out by Legal & General in 2013 indicated that whilst 61% of business owners indicated that a loss of a key employee would have the most impact on their business, only 43% had any life cover in place. 51% have unprotected corporate debt.
So not so much “a cunning plan” (á la Baldrick), but sensible succession planning will ensure your business, co-shareholders/partners and most importantly your family are protected.
If you would like to discuss your requirements Cave & Sons Chartered Financial Planners are ideally placed to help you to consider the implications to your business and, if appropriate, take the necessary action. If you would like to arrange an appointment, please contact Gregg Taffs at Cave & Sons on 01604 621421
Cave & Sons Ltd is authorised and regulated by the Financial Conduct Authority. Financial Services Register number 143715
