Do you have a growing and successful business with 2-5 directors (partners)?Have you ever considered what may happen if one of the directors (business owners) were to pass away?
We have witnessed what can happen when a business partner passes away including the emotional and financial impact on all of the families and business partners.
Areas of concern:
- If one owner were to pass away the surviving spouse may call on their share of the value of the business that was previously their spouse’s ownership.
- The surviving business owner would potentially have to find a large amount of money to fund the surviving spouse.
- The surviving spouse may wish to become an active owner in the business which could lead to disagreements in the direction of the business.
- With the loss of a business partner, banks are reluctant to lend money to the surviving business partner.
- Lawyers may need to be involved, resulting in large legal fees.
If your business partner passed away and your business was worth $1,000,000 the surviving spouse could call on their 50% share ($500,000).
- Do you have $500,000 available in cash to pay the spouse?
- Lending institutions may not lend you the money as you have just lost a key person in the business.
- Would you be comfortable if your partners spouse had a 50% say in the running of your business, plus 50% of all the profits?
In our experience this could end up being a nightmare for everyone involved.
Buy Sell Agreement – Business Owner Protection
With strategic planning we are able to provide a solution to the above nightmare.
The solution is structured via a buy sell agreement for all the business owners.
We organise a time to meet all the business owners and agree on a value of the business.
We then organise the relevant insurance cover to ensure that in the event that a business partner were to pass away, that the surviving spouse’s family is looked after and that the remaining business owner/s retains control of the business.
There are many traps with structuring the buy sell agreement and we strongly suggest you meet with Jason from our office to discuss the above in more detail.
Call Jason on 0414 955 957 for a FREE consultation meeting and join a growing group of members who all enjoy the Your Life Experience.