As an employer, you may be concerned about the impact on your company of a key employee’s death. The loss of key relationships, specialist knowledge, impact on sales and profit could have serious repercussions for your business.
For many self-employed individuals, their business or share in it, represents a significant amount of their asset base. It also represents a great deal of hard work and effort, the value of which they usually expect to enjoy one day, perhaps through sale on retirement. Something rarely considered is what happens to their share of the business if they die or become seriously ill and cannot fulfil their duties.
Business partners and share-holding directors need to have an agreement in place to make sure their interests, in the event of their death or serious illness, are looked after.
This would usually involve an agreement to buy shares either on death or serious illness which prevents the concerned person from working. This has the twin advantages of: providing the former owner or his family with capital; and avoids inexperienced heirs having a significant stake in the business, the decisions of which may place the livelihoods of the surviving business owners in jeopardy.
Having a Corporate Will in place cannot replace key employees but it can provide a pre-agreed framework for owners and other stakeholders to follow. Having an agreed plan which has been thought through whilst not managing a potentially existential crisis for the business provides greater certainty of continued success.
If you would like more information on this matter please contact me.