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  • Mixing Family With Your Business Can Be Like Mixing Oil With Water

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    reception2999
    242 vizualizări2 pagini
    Paul and Peter establish a business together, The Music Supplies Store Pty Ltd. They are aware of the need to establish an insurance funded Business Exit Agreement. Two years later, Peter dies unexpectedly. Paul now wants to have control of the business. He does not want to share 50% of the business profit with Cynthia. Cynthia doesn't have Peter's expertise and knowledge of the industry and the business begins to falter.

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    MIXING FAMILY WITH YOUR BUSINESS CAN BE LIKE MIXING OIL WITH WATER

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    Paul and Peter establish a business together, The Music Supplies Store Pty Ltd. They are aware of the need to establish an insurance funded Business Exit Agreement. Two years later, Peter dies unexpectedly. Paul now wants to have control of the business. He does not want to share 50% of the business profit with Cynthia. Cynthia doesn't have Peter's expertise and knowledge of the industry and the business begins to falter.

    Drepturi de autor:

    Attribution Non-Commercial (BY-NC)
    Descărcați ca DOCX, PDF, TXT sau citiți online pe Scribd
    Indicator pentru conținut neadecvat
    242 vizualizări2 pagini

    Mixing Family With Your Business Can Be Like Mixing Oil With Water

    Încărcat de

    reception2999
    Paul and Peter establish a business together, The Music Supplies Store Pty Ltd. They are aware of the need to establish an insurance funded Business Exit Agreement. Two years later, Peter dies unexpectedly. Paul now wants to have control of the business. He does not want to share 50% of the business profit with Cynthia. Cynthia doesn't have Peter's expertise and knowledge of the industry and the business begins to falter.

    Drepturi de autor:

    Attribution Non-Commercial (BY-NC)
    Descărcați ca DOCX, PDF, TXT sau citiți online pe Scribd
    Indicator pentru conținut neadecvat
    din 2

    MIXING FAMILY WITH YOUR BUSINESS CAN BE LIKE MIXING OIL WITH

    WATER

    The Risk

    Paul and Peter establish a business together, The Music Supplies Store Pty Ltd. While
    they are aware of the need to establish an insurance funded Business Exit Agreement,
    they decide to leave this. Anyway, there will be plenty of time to do that later.

    Two years later, Peter dies unexpectedly. Paul now wants to have control of the
    business. While he got on well with Peter and Peter's wife, Cynthia, Paul does not want
    to share 50% of the business profit with Cynthia.

    Cynthia sets the value of Peter's share in the business high and Paul cannot afford to buy
    Cynthia out. He does not have money put aside to fund a buy out and he is unable to
    obtain finance from the banks. Cynthia tries to sell her shares to a third party, however
    she unsuccessful at this.

    Paul and Cynthia now have no choice but to run the business together. Cynthia doesn't
    have Peter's expertise and knowledge of the industry and the business begins to falter
    which impacts on Paul and Cynthia's profit.

    Plan Protect and Prosper

    Paul and Peter should have each purchased a life insurance policy and entered into a
    Business Exit Agreement when establishing the business. The Business Exit Agreement
    would have provided for a method for valuing the business and Paul could have ensured
    that he had sufficient funds to buy Peter's share. This may have also prevented the
    business from faltering.

    Once Paul and Peter had spoken to their advisor about purchasing life insurance, their
    advisor should have made an appointment to see a lawyer who is experienced in this
    area. This meeting would then occur between Paul, Peter, their advisor and the lawyer
    and together they would create a Business Exit Agreement that Paul and Peter were
    happy with and that worked with their insurance policy.

    If only Paul and Peter had spoken with us!


    Our Business Structures and Planning Team and more than happy to discuss with you
    and your client the benefits of Business Exit Agreements. Please contact Ian Tindale at
    iant@redchip.com.au or Emily Ponting at emilyp@redhcip.com.au or on (07) 3852 5055
    to arrange a confidential and obligation free discussion.

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