Build your exit strategy with our experienced financial advisor

Having a clear and well defined exit strategy for your business will help to protect your income streams and you and your family’s future. Wealthbuilders can provide business owners with a certain and predictable outcome. Cash, control and certainty are our keywords.

Barry Vincent from Wealthbuilders is a professional financial advisor and insurance broker who can make sure that you future proof the value of your business. Barry will assist with the planning of a business exit strategy that will ensure that key people are retained in the company and will provide a suite of integrated risk management options, including managing your ACC affairs more effectively and saving you money in this area. Contact Wealthbuilders today for more details.

An effective approach

Barry Vincent employs a simple but effective approach to providing you with the right solutions for the future of your business. He will take the time to identify your needs and core values before presenting you with strategies in a clear and easily understood manner. Barry will assist you in making informed decisions about the implementation of strategies and will keep you up to date and informed.

Plan for the future

To effectively future proof your business, some difficult questions must be considered.
  • If you had died or were disabled yesterday, who would own and operate your business today?
  • Would your business be able to provide income if you became disabled?
  • Would your business be in a position to provide income to your family in the event of your death?
  • Would your estate have sufficient liquid assets to pay creditors, extinguish personal guarantees, repay business and personal loans and pay other estate settlement costs?
Without advance planning, a small business may be forced to liquidate or may have to be sold at a greatly diminished value. A forced sale at a time of a tragic occurrence is not an ideal result. A grieving widow and family are not in the best mind space to negotiate a satisfactory settlement.

The three business continuation options

In planning to preserve the value of their business interests, business owners have three alternatives to evaluate. The objective of business continuation planning is to assist you in evaluating which of these alternatives would be suitable for your situation and to help provide the plan and funds needed to achieve the most suitable outcome for your business and family.

Option 1:

Continue trading profitably. This is the most desirable outcome in most situations.

Option 2:

Maintain the business value for a profitable sale. This may well be the best option for some business owners’ situation.

Option 3:

A controlled windup. This is sometimes the most practical option.

To find out more, please contact Barry Vincent at Wealthbuilders today.

What happens to co-owners/shareholders after a death or serious disablement?

1. Surviving Majority Shareholders

  • The other shareholders will probably want to follow their existing development programme and draw a salary
  • The heirs may harass and frustrate the company
  • Unpleasantness and bickering are likely results

2. Surviving Minority shareholders

  • The controlling interest passes to new majority shareholders
  • Though the survivors must carry on the business
  • They are outvoted by untried interests
  • Jeopardising their very jobs and incomes

3. A surviving Equal shareholder

  • Also faces a conflict of interest as to dividends and policy
  • Leading to deadlock with the heirs
  • And eventual liquidation

4. On the other hand the heirs probably face problems also

  • Drastically reduced income due to the death of the breadwinner
  • A risky investment in a business (relatively speaking, as investments go.)
  • An inherited interest that they may not want
  • Inexperience in the business

Their expectations from the business are probably different from those of the remaining shareholders

  • Dividends vs salary increase
  • Dividends vs investments

Talk to us about managing these issues fairly and to give you a satisfactory outcome.

5. Personal Guarantees for business borrowing

  • Personal guarantees survive your death and are prior charge on your estate.
  • Your estate cannot be probated until such time as all personal guarantees are extinguished and debts that you are responsible for have been reassigned.
  • A bank or other lender may insist on part or all of any business loans being repaid if one of the key people or loan guarantors in the business dies or becomes totally disabled.

6. Shareholder current accounts.

  • In the event of a shareholder exiting the business, there may well be a debit or credit current account.
  • If the shareholder current account is in credit, the estate’s solicitors will expect that to be paid out by the company.
  • If the current account is in debit the company will expect the estate to repay the shareholder.

7. Loss of profits and income-key person issues current account

  • If the deceased or disabled shareholder is a key person, the cost of their loss to the business needs to be calculated and compensated for in some way.
If these issues are not addressed, the financial burden that a tragic event can impose on a company will in many cases undermine the business and cause its demise. Wealthbuilders “in control” risk management and succession plan will highlight these areas of importance for you and enable you to make informed decisions as to how you are going to deal with these issues and give you control over outcomes.