Business Succession Planning

At its foundation, its the handover of roles. From one person to another. Or from one person to a legal entity to get the job done. Planning for this, ensures the business interruption is minimized and employees, customers and suppliers are confident of business continuity.

There are many elements in business succession planning. Chief among them is share holding control and cashflow coverage.

In the event a keyperson or shareholder dies, the surviving shareholders must have a plan in place to cover for these eventualities. These events will happen. It is a question of when it will happen. Then are you ready for it, when it happens.

Shareholders control and decide on the direction of the business or company. In the event a shareholder dies or becomes permanently disabled, that shareholder’s control of the business is opened up to other people to control the business or company. Usually that shareholder’s spouse, children or relatives will get control and likely cause changes in the business direction.

To prevent such a shareholding issue, a Buy-Sell Trust is created by the shareholders. This buy-sell trust contains the buy-sell agreement to distribute the deceased shareholder’s shares to the surviving shareholders. This distribution can be funded by Life Insurance policies or a Put-option to buy the shares at a certain price.

A Keyman is the person that brings in the business or sales for the company. This person is essential in bringing in the business or sales. If this person dies, or is permanently disabled, the business will suffer a terrible impact to its cashflow.

To solve this type of temporary cashflow problem, the business needs to plan its cashflow requirements and buy Keyman Insurance to cover this cashflow risk.

• You need the help of a Professional Estate Planner, who is familiar with the Buy-Sell Trust and Life Insurance policies to fund the trust.
• This estate support team should include specialist lawyers, accountants, tax and finance and company secretaries.
• Rockwills franchisees are professional estate planners, with in-depth training in estate planning, Rockwills estate planning processes and support services.

• You need the help of a Expert Insurance Agent who is familiar with Keyman Insurance, Life Insurance policies and the Malaysian Tax Law on Keyman Insurance.