Independent Financial Advisers

For many of our clients the size and value of their business today would have been unimaginable when they first started out. At the point of starting a business, priority is usually given to everything that is essential to get the partnership or company legal and up and running. Once operational, with the day to day challenge of covering overheads and making a profit, it is easy to overlook Partnership Protection or Shareholder Protection. Yet this oversight can cripple business's later down the line. 

Most successful business's form and survive through the coming together of people with vision and the ability to make it a success. There would have been a host of reasons taken into account in selecting your partner or fellow shareholders. This selection could have been based on their knowledge, business acumen, work ethic and personality. It is usually fair to say you did not pick them by chance and probably would not accept a stranger taking their place. Unfortunately without a suitable Partnership Protection/Shareholder Protection Scheme a stranger may be exactly what you get. 

Before recommending partnership or shareholder protection we advise our clients to take the time to think about who their partners or fellow shareholders are likely to leave their estate to. In doing this, you will be looking at the individuals who, on the death of the partner or shareholder, will acquire a sizable share of your business. On death, any share in the business is simply another financial asset to be shared out amongst the family of the deceased. 

Equally, if you or your partner/fellow shareholding director become sick and have to sell up and exit the business, the remaining partners/shareholders may not be in a financial position to facilitate this. The only course of action in this scenario, would be for a suitable buyer to be found, who may not mirror the vision or ethics of the remaining partners/shareholders. Even though you all draw health incomes from the business, this is a reflection of your input. How long would the company survive paying a salary and dividends to an individual no longer contributing to the success of the business?

Partnership Protection and Shareholder Protection Schemes ensure that control is retained by the remaining business owners and that any exiting partner/shareholder or their family are fairly compensated. 

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Without Partnership Protection/Shareholder Protection 

• No Shareholder/Partnership Protection means a sizable share in the business may go to the deceased's family, who may have no interest in the business and instead needed a cash lump sum.
• No Shareholder/Partnership Protection means the remaining partners/directors may wish to buy the deceased's share in the business, but have insufficient resources to do so.
• No Shareholder/Partnership Protection mean even if you are financially able to buy the deceased share in the business this may involve depletion of savings or costly borrowing.
• No Shareholder/Partnership Protection mean the shares may have to be sold to someone who does not share the other director's vision, possibly even a competitor.
• No Shareholder/Partnership Protection means if you become seriously ill and want to exit the business, your partners or fellow shareholders may not be able to raise sufficient capital to adequately compensate you.
• No Shareholder/Partnership Protection means you may be happy for the shares to pass to a partner's or fellow sharholder's current spouse, however, they could subsequently remarry. Their new spouse may then be exerting considerable influence on your business.
• No Shareholder/Partnership Protection means Business Property Relief from Inheritance Tax on the shares may be lost and increase the inheritance tax payable.
• No Shareholder/Partnership Protection means the instability in potential ownership may cause a loss in clients and your Bank's confidence in the business.  In these situations there is the real posibility of your Bank reducing or removing your business's credit facilities.

With Partnership Protect/Shareholder Protection 

• Partnership Protection/Shareholder Protection provides the peace of mind that should a partner or shareholder die or become critically ill, you will have sufficient funds and a formal agreement in place that ensures ownership remains with the surviving partners/shareholders.
• If Partnership Protection/Shareholder Protection is in place, you have the peace of mind that your family will receive a cash lump sum and fair compensation for the sale of your shares in the event of your death.
• If Partnership Protection/Shareholder Protection is in place, you will have the option to exit the business and receive a cash lump sum if you become critically ill, but no obligation to do so (you cannot be forced out).
• If Partnership Protection/Shareholder Protection is in place, there will be greater continuity in business ownership and less risk of loss of confidence by clients and your Bank. 

We are able to provide both the appropriate Partnership & Shareholder agreements and suitable insurance policies to protect your business. Don't leave it too late, a good solution today is better that a perfect solution when its too late!

If you are considering Partnership Protection or Shareholder Protection, please feel free to contact us for Independent Shareholder Protection Advice. We are able to provide appointments at your office across the whole of West Sussex - Brighton, Hove, Haywards Heath & Crawley, East Sussex, Surrey - Croydon Sutton, Reigate, Redhill,  South London - Wimbledon, Fulham, Chelsea and Hammersmith and Central London.

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