A lot of self employed or business owners spend a lot of time building up value and equity in their businesses, what are the options when a business owner or co-owner dies or is unable to continue in his or her role?
The solution to succession planning in the event of death, illness or injury consists of two key elements:
- The purchaser having the cash precisely when required to buy the business interest, usually best achieved through correctly owned insurance cover; and
- A buy/sell agreement between the parties concerned, documenting the arrangements to ensure the cash created by the insurance cover is used as intended.
You could look on this as a will for the business. Importantly this needs to be set up before anything happens.