Owners Issues

If an owner is lost to the business through death, disability or major illness, there are usually two issues to address:

• Control of the business for the remaining owners, and
• Certainty for the departing owner (or their estate) for the sale of their shareholding.

The remaining owner needs to retain control; the departing owner needs to be certain of the value they will get for their shares.

Insurance cover is often required to provide adequate funding for a properly constituted Buy Sell agreement. Buy Sell agreements should usually include the following provisions:

• An agreed value for the shares, fully funded by cash on hand. The agreement ensures a certain and predictable outcome and a "win - win" solution for all parties.
• We prefer to see the use of "agreed value" clauses within buy sell agreements. This "agreed value" can be set annually when the accounts are completed. This method alleviates a lot of potential arguments over the "correct" value of the shares, in the event of a tragedy.
• A mandatory rather than optional agreement to buy the shares, triggered by death, total & permanent disability or major trauma (the shareholders want to create certainty). Please note that there is flexibility for this agreement to be tailored to whatever level of disability the shareholders see fit.