If you’re a business partner or a shareholding company director, your share in the business is likely to be one of your most valuable assets.
Is your share or that of your business partners protected?
What would happen to the business if you were to pass away?
- Would the surviving partners / directors have easy access to funds in order to purchase your share of the business from your estate?
- Would those who inherit your estate want to involve themselves in the business?
- Would they be able to sell their share?
- What if you were diagnosed with a critical illness – if you wished to retire from the business, who would be able to provide the funds to purchase your share?
Without carefully considering these questions, the future of the business could be at risk, not what you, your business partner or shareholders had in mind when starting out.
The business could suffer for a number of reasons:
- The beneficiaries may not have any interest in ensuring the success of the business and therefore might not invest any of their shares back into the business.
- They may want to sell their share of the business to a third party if business partners cannot raise the funds themselves. This may not suit your business plan.
- Your family could have to step in to help run a business they don’t know anything about, thus jeopardising everything you have worked hard to build.
Taking out Shareholder / Partnership Protection will act as a safety net should the unexpected happen. It will have agreed what barriers need to be overcome in unfortunate circumstances and what sufficient protection solution is to put in place, with all parties in advance.
By combining a means to provide the necessary funds with a legal agreement ensures the business funds end up in the right hands and is used for the right purpose.
Deciding what level of cover you need will depend on a number of different factors and will need to reflect what your share of the business is, how much the business is worth, what personal savings were invested (by all partners) and how much time was sacrificed to make the business a success.
It’s easy to see why it’s definitely worth considering Shareholder or Partnership Protection for you, your family and the future success of your business.