Buy and Sell Agreement

A Buy and Sell Agreement addresses the needs of the remaining business ownersin the event of the death or permanent disablement of one of the owners, but it also addresses the needs of the deceased owner's dependants and the needs of the disabled owner and his dependants. It leaves no uncertainty as to what should happen in the event of the death or the permanent disablement of a co-owner.

The deceased owner's dependants or the disabled owner and his dependants have lost their income and, therefore, they need capital that could substitute the deceased or disabled owner's income-generating capacity.

Key Person Insurance

The death of a key person who is an employee in a business could cause financial difficulty for various reasons:

• A replacement needs to be found for the employee. This could cause considerable financial expense and depending on the skills required, it could take months.
• The new person may have to be trained/up skilled. Besides the direct cost of training, it also means that business comes to a standstill while the person is being trained.

If the key person is also an owner or co-owner of the business, the problem may even be more serious:

• Suppliers and banks could insist on stricter credit terms, as the existing agreement might have been based on a trust relationship with the original owner.
• The owner probably understood the market well and knew the right people in the industry. A network of potential clients may be lost with the death of the owner.

It is clear that the death of a key person may result in a reduction of sales and profits. The business could suffer severe financial distress.

For more in-depth information about the above-mentioned insurance, please contact us, for there is more to it than discussed. 

 As a small businessperson, you have no greater leverage than the truth. 
 John Greenleaf Whittier