Share Protection

Share Protection is often overlooked by business owners, so the value it offers can be easily missed. With the right knowledge, companies can become better placed to make the right decisions in protecting themselves against certain events.

• Keep Control – Share Protection helps to ensure that you retain control of your business. It provides funds to help purchase the shares, rather than having to draw on funds set aside for other purposes and disrupt business plans.

• No Protection – If a business partner dies without a plan for their share of the company, it will normally fall into the employee’s estate, giving the family 2 options:

• Partner – They can choose a member of the family to take up the deceased’s position as a partner

• Sell – The family can sell the business share

If a member of the family takes over the share of the business, there is no guarantee that they will be able to contribute to the business and this could, in fact, be detrimental to the running of the business.

The other alternative might see a competitor or an unwelcome partner buying the share of the business, instead of the remaining shareholder’s retaining control. This can have massive implications for the business.

By taking out Shareholder protection, a business can protect itself against an unwanted or unexpected processes. The lump sum paid out to the business helps them buy back the shares from the family quickly and efficiently and keeps the business running as normal.

This could impact the business in a number of different ways:

1. The need to raise capital to buy shares if the spouse decided to sell
2. Ensuring the spouse receives a fair price for the shares
3. Attempting to stop the shares falling into the deceased estate
4. Attraction from competitors and the poaching of key staff
5. The introduction of an unsuitable buyer of the shares
6. Unfavourable prospects of the spouse keeping the shares
7. Any impact on the confidence and productivity of the employees