Ownership Protection
The death of a business owner can result in the demise of an otherwise successful business simply because of a lack of business succession planning. While business owners are alive they may negotiate a buy-out amongst themselves, for example on an owner’s retirement. But what if one of them dies?
The remaining owners must now negotiate with the deceased owner’s legal representative, who may be more concerned about the needs of the estate than the needs of the business.
Many business owners mistakenly believe this contingency has been catered for in the business’ constitutional documentation but often there is no buy-out provision or if there is, it’s often ineffectually drawn up and inadequately funded.
Similar issues arise when an owner is disabled and cannot (or no longer wishes to) be involved in the business.
Why Ownership Protection is so important?
Ownership Protection can provide the continuing owners or their nominees with sufficient cash for the transfer of the outgoing owner’s equity to the continuing owners should a business owner die, become disabled, or suffer a critical illness.
