We make sure that your business can withstand any adversity

At Logical, we recognise that the loss of key individuals within your organisation’s ranks due to death or serious illness can be crucial to the survival of your business.

Business Succession and Key Person Planning

Business succession insurance is an integral part of any succession planning that allows for the efficient and fair realisation of equity between owners of a business if one business owner dies or needs to leave the business due to serious illness or disablement.

It is one of the most important moves any business can make, and insurance solutions can be designed to provide the necessary funding to ensure the equity a shareholder owns within the business can be transferred to their family upon death, disablement or serious illness.

Like all businesses, it is the people behind your organisation that enable it to prosper. At Logical, we recognise that the loss of key individuals within your organisation’s ranks due to death or serious illness can be crucial to the survival of your business. That’s why we believe every business should consider Key Person insurance as it provides a cash injection to offset any reduction in revenue, or cover the debt obligations of your business.

Yet we often find that businesses fail to address these important matters until it is too late. The most common results of inadequate business succession planning and key person protection include long term damage to the business due to shareholder and estate disputes. In Logical’s experience these disputes have led to some businesses closing down as the distractions, disruptions and financial pressures between the shareholder(s) and estate(s) were too challenging.

In order to fully appreciate the significance business succession planning can have on your business ask yourself the following questions:

  • What would happen to your business if you lost your key salesperson or head foreman?
  • If the owner or other key person died or suffered a serious illness or injury could the businesscover the loss of revenue and goodwill, and repay the debts of the business?
  • If your business partner died, do you want to be in business with their executor/estate?
  • If your business partner died or suffered a serious illness or injury could you buy their share of the business?
  • What would you do if you had provided a personal guarantee for a business loan or lease, andyou become injured and can no longer contribute to the business?
  • How would your family maintain their lifestyle if you died?

Case Study – Mark, Peter and Suzanne

Mark, Peter and Suzanne are equal equity shareholders and directors in a thriving services business, which they started up ten years ago. This business now has offices in the Eastern States of Australia and New Zealand and employs over 70 people.

This is a high-quality, competitively positioned and highly profitable company with a solid balance sheet. However, Mark, Peter and Suzanne realized that the death or serious illness of a shareholder would have a significant detrimental impact on the profitability of their company.

Logical assisted Mark, Peter and Suzanne in developing a comprehensive and effective strategic plan to address this business risk. The strategic planning and management (assessment, strategy formulation, strategy execution and on-going management) involved the following:

Logical helped them in the following ways:

Introduced Lawyers

Introduced lawyers skilled in arranging shareholder agreements, incorporating the certainty around the transfer of shares from one party to another, including resulting in death or critical illness of any one shareholder.

Shareholder protection insurance

We ensured that an outgoing shareholder or their estate receives a pre-agreed amount for the shares held. The protection plan incorporated the risks of Death, Total & Permanent Disability and Critical Illness and the level of cover is adjusted as the value of the business changes.

Key person insurance plans

We arranged and implemented a company owned key person insurance plans designed to protect the key revenue drivers and capital providers of the business. These protection plans also incorporated the risks of Death, Total & Permanent Disability and Critical Illness. The plans included the shareholders plus three key people they identified during our assessment process.

Strategic Formulation

The strategic formulation was developed with input from the business’s accountant, so that a well defined exit plan ensured the realisation of the shareholders shares in a tax efficient manner to ensure that they fully utilise any available tax concessions.

Outcome

The business is now in the best possible position for a smooth transition should disaster strike, leaving the remaining shareholders to focus on growing the company’s profits into the future. Mark, Peter and Suzanne where relieved they had removed a key risk from their business and where extremely grateful to Logical for assisting them in this process.

Partner with Logical

Simply complete the form below and a member of our team will get in touch within 24 hours.











Contact Us

We're not around right now. But you can send us an email and we'll get back to you, asap.

Start typing and press Enter to search