Why is a written Business Succession Agreement important?
If a written Business Succession Agreement is used and triggered according to the terms of the agreement, the business insurance proceeds are generally quickly available, and the following benefits are provided:
Certainty – about succession plans, i.e. what happens and when.
Stability – to the business, the continuing business owners, and to employees.
No need for additional borrowings for the buy out – the continuing business owners can buy-out the terminating business owner’s share without having to borrow additional money.
An agreed sale price – to be paid to the terminating business owners or his or her estate.
A significant reduction in delay – between the trigger event and receiving the insurance proceeds.
A sense of security – to financiers, suppliers, staff and customers.
Preservation of the value of the business.
Business Partner Insurance – A Story
Stan (35) and Oliver (36), enter into a business together, ABC Electrical Pty Ltd. They are so busy setting up the business, they do not put a funded buy-sell agreement in place. They think there will be time to do that ‘sometime in the future’.
Business Partner Insurance (Buy-Sell)
“If one of your partners dies do you want to remain in business with their spouse? Their accountant/their lawyer?…or their incredibly spoilt BMW Driving son?”