If you run a business, have you considered what would happen to it if you, or your co-owner(s), were to suffer a serious illness or die?

Losing an owner can have a huge impact on the day-to-day running of a business and can quickly result in financial difficulties. Boardroom confusion can lead to conflict in decision making as the surviving owners and
the deceased’s family may have very different ideas about the future of the business.

We have outlined below some scenarios:

Smith & Partners is a business worth £1,500,000 and is a traditional partnership with three partners: Clive, Susan and John, who each have an equal share. In the event of one of them dying before retirement, the business owners want the option to be able to buy the deceased partner’s shareholding. Sadly, Clive dies unexpectedly. 

In the scenarios below we show how Partnership Protection can be used to help clients who want to secure their business if something happened to one of their partners. In addition to helping you to protect your business in the event of an illness or death of a partner, or loss of a key employee such as a director, we can
also help with pension planning and loan protection. 

Please note that Shareholder Protection offers the equivalent protection for a limited company’s shareholders. 

The Company has no Partnership Protection in place.

The remaining partners don’t have the funds available to buy the deceased’s share. Clive’s family are unable to efficiently realise the value of their loved one’s share of the partnership. 

As a result the future of the partnership is thrown into doubt as the ownership is diluted and decision making becomes difficult.

The Company has Partnership Protection in place. 

Each partner has Partnership Protection for £500,000 life insurance on an ‘own life’ basis. In this case when Clive passes away, the £500,000 benefit is paid to the surviving partners. The partners can now buy Clive’s share of the business and Clive’s family receive a fair value for their loved ones share of the partnership.

The business is able to carry on trading.

​Please note: these examples are for illustrative purposes only and are not based on a real company.