Issue: 18
Sent: 14-11-2005 00:16:27
In this issue:

The young bull and the old bull! - Tony CrillyAnd you thought that was safe? - Lester WillsWhat to do when starting an allocated pension - Tony NeglineThe eBay Economy - Mark EdwardsIndustrial Relations: An Investment Market Perspective - John A Robertson
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The young bull and the old bull! - Tony Crilly

Tony Crilly

Does anyone know the old story about the young bull and the old bull? Well it was about the eager young bull wanting to have some fun with the valley full of cows. The old bull shows experience by stating that they should take their time over the task.

 

I think this is a very common example of disparity of attitude between business owners of different generations. I am often confronted by the same differences of opinion between a younger business owner not wanting to pay for the expense of insurance on the life of an older proprietor. Very often the younger person will not see the value in protecting against risk, especially risk of losing a business principal.

 

Here are some points to consider when advising business owners about business succession agreements:

• If they don’t have an agreement in writing, anything is better than that;
• The key to the process is providing certainty on the exit of an owner on happening of an event;
• Remind them the document is about stopping families becoming involved in the business with the surviving owner;
• There is rarely a perfect solution, just find the best one in the circumstances;
• If there are a few owners and one of them refuses to be part of the agreement, let them;
• Keep it simple if possible and don’t try to be too fancy in the documented requirements
• Understand that tax is payable a s well as stamp duty on  a transfer
• Make sure a document gets signed and try to prevent endless procrastination;
• Make the buy sell agreement the start of a corporate strategic succession plan
• Assist the clients to gather the required documentation
• Reassure the clients that their circumstances are “normal”, that is most business owners have trouble finding a solution
• Encourage logical commercial outcomes and discourage high emotion;
• Get help from an accountant when determining valuation principles.

 So there are just a few concepts that I believe assist in the practical application of risk insurance in circumstances of a buy/ sell agreement.

 

Happy hunting and I look forward to hearing some war stories from readers on this topic. Just email me the details and I am happy to help!

This email is general in nature only and does not constitute or convey specific or professional advice. Legislation changes may occur quickly. Formal advice should be sought before acting in any of the areas discussed. Be aware that the information in these articles may become innaccurate with time. Responsibility is disclaimed for any inaccuracies, errors or omissions. Particular investments are neither invited nor recommended and hence this publication is not "financial product advice" as defined in Section 766B of the above legislation. All expressions of opinion by contributors are published on the basis that they are not to be regarded as expressing the official opinion of any other person or entity unless expressly stated. No responsibility for the accuracy of the opinions or information contained in the contributor's articles is accepted by any other person or entity. Copyright: This publication is copyright. If you wish to reproduce this article you require a license, which can be purchased here, to do so.