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What can happen if your business partner passes away?

It’s one of the most important questions that a business owner should consider, but we frequently find that it hasn’t even occurred to them, let alone been factored into a business continuity plan.

What position would you be in, if your business partner or a shareholder passed away?

You might be taken aback to learn that 54% of SMEs fail within 12 months of losing a key person, shareholder or business partner. Clearly the loss of someone close will have an emotional and practical impact, but the repercussions for the company and surviving family members can be disastrous.

When planning for this kind of potential crisis, business owners should consider the following:

How much do you think your business is worth? Does your company have enough cash in the bank to buy the shares back from one of your business partners widow/widower?

If the business doesn’t have that kind of money lying around, would you be able to get a large enough bank loan, re-mortgage, cash in some investments, or would you sell your home?

Would your inability to buy back the shares lead to a widow/widower coming to work in your organisation without the necessary skill set, whilst expecting the same wages that their deceased partner received?

Could your inability to buy back the shares lead to the deceased’s partner having an active role in important business decisions, without the experience required?

If the company can’t buy the shares back from your ex-business partner’s estate, would the estate sell the shares to a competitor?

Business partners should also plan for their loved ones, in case the worst happens:

How would your loved ones benefit from the business you’ve helped to create, if you die?

Supposing your surviving business partner was able to round up enough money to buy your shares, how long would it take for that to happen, and what would be the repercussions of a delay on their day-to-day finances?

The relevant insurance products that protect against the death of a business partner or shareholder are called “Share Protection” and “Partnership Protection”.

This example demonstrates the potential outcomes of being covered versus not being covered:

Share & Partner protection

We’ll be happy to explain how it works in more detail, without obligation or high pressure sales.  Call us on 0844 809 4897, or click here to leave your details and let us call you back.

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