The protection needs of partners and shareholders are broadly similar – to enable them to ‘buy out’ the share of a business colleague who has died or become too ill to carry on working. It can form part of an arrangement that is designed to ensure that control of the company stays in the hands of the current owners, and that the family that inherits the shares receives their full value.
Depending on the type of partnership or shareholder protection, it can help by enabling the business owners to continue trading following the loss of a key member of the business, as it means that when used as part of a suitable arrangement the remaining business owners can choose to buy out the interest of a critically ill or deceased business owner. It also helps to ensure that the business owner’s family receives the full value of their interest in the business on death.
Without this type of cover, control of the business could pass to someone who has no experience of, or no interest in, the day to day running of the business. The new owner may wish to run it in a way that is unacceptable to the other owners or even want to sell their share rather than becoming involved in the business.
With suitable cover and a suitable arrangement in place, the remaining owners do not have the issue of raising capital to buy out a business owner who is critically ill, or the heirs of a business owner who has died, and allows them to keep control of the business.
Here at Dawn Slater Wealth Management we have a team of experts on hand to help you draw up protection agreements that will help alienate any future issues so why not get in touch today on 01635 551926 to find out more.