Partnership Protection
It is important that the principals and stakeholders of a business ensure that suitable mechanisms are in place to protect their role and investment in the business.
Purpose of business insurance:
- To protect your business
- Provide funds to enable surviving business partner/s to buyout the financial interest of the deceased business owner
- Provide funds so that partners can buyout the financial interest of an owner who is unable to work due to illness or injury
- Replace lost business income
- Replace lost profits
- Repay a business debt
- Obtain release from personal guarantees
- Maintain credit standing of the business
- Maintaining cash flow to cover cost of replacing and training new key person
- Keep business viable until an appropriate buyer can be found.
Questions for you to consider:
- How would their business fare if one of their key people were to suffer a critical illness or die?
- Does anyone else in the business have his or her knowledge, expertise or contacts?
- Could the business operate without them?
- Would their clients take their business elsewhere?
- Would profitability and goodwill suffer and would that impact on the value of the business should they need to sell?
