Succession
planning

and business
assurance

Our executive consultants, seasoned advisors, and trusted associates collaborate in our industry first solution to top management and C-level Executives of businesses.

Collectively, we assist directors, shareholders, business owners, senior management, and key persons (“partners”) safeguard the value of their interest or stake in the business by identifying and addressing succession risks, position their business for sustainable growth to mitigate the risk of a subdued valuation, and plan for the envisioned transfer of wealth to their successors and dependants.

How we help Boards and key persons

Board Level Succession Planning

  • Identifying and validating existing and latent succession risks within the Board structure and governance framework of the business.
  • Identifying critical positions and highlighting potential vacancies.
  • Selecting key competencies and skills necessary for Board continuity.
  • Reviewing existing succession plans to ensure its practicality.
  • Developing action plans for individuals to assume positions identified in our risk screening.
  • Enabling Boards to adopt and incorporate new or revised succession plans.
  • Focusing development of individuals to meet future Board needs.
  • Training and mentoring to key persons, specifically Board members, in lieu of their eventual succession.
  • Ensuring succession planning is closely tied to Board strategy and goals.
  • Understanding the importance of engaging executive and senior Board members, Shareholders, where appropriate, and Executive Management in the process.
  • Clearly defining the development of key talent, and
  • Ensuring Board members understand their role in the process and know what is expected of them.

Assisting Boards with the execution of succession plans when a member exits the business.

Where a lack of continuation will be critically detrimental the business, our legal counsel and professionals can act as interim executives until a suitable successor has been identified and cultivated, where suitable.

Identifying threats and detractors within the business to mitigate the risk of subdued equity valuations due to ongoing or potential underperformance, slack growth, and strategic planning deficiencies.

Business Succession Planning

Quantifying the value of an owner or partner’s stake or interest in the business for succession planning purposes through a combination of qualitative and technical analyses. All facets related to succession planning will revolve around the value of the owner or partner’s equity or holding in the business.

The business is almost certain to provide some of the funding that an owner or partner would need to retire, but by building an asset outside of the business, such owner or partner will be insulating their retirement from risks that can potentially affect the business. Our solution offers business owners and partners in the business the opportunity to achieve this, with the benefit of flexible payments, diversity in a tax-free portfolio, transparent charges and active, ongoing management by our seasoned advisors and wealth managers.

Businesses occasionally lend money to their owners. This practice is not uncommon. A problem arises if the owner/borrower dies or becomes disabled. The business is then faced with the risk that the estate of the owner may not be in a position to repay the money owing to the business. This puts the estate at risk of being sued by the business to recover the loan. The remaining owners are indirectly at risk. If the business cannot recover the capital, then the remaining owners suffer consequential damages. The solution is to cover the debit loan account with a policy and to cede the policy to the business as security. Should the borrower die, or become disabled, the proceeds of the policy can be used to settle the debt. This relieves the owner of the debt, and the business recovers its capital.

Loan account assurance covers the life of the owner or partner of the business in the event of his/her death and/or disability where he/she lent money to the business. It pays an amount of capital which will, after estate duty, be equal to the loan account. This cover will enable the business to repay the loan and thus protect the capital structure of the business. The main objective of credit loan account protection is to ensure that a business that has borrowed money from an owner or partner will be able to repay the money to the estate of the owner or partner upon his/her death and/or disability.

Crafting an action plan to ensure that an owner or partner’s stake or interest in the business is appropriately transferred to his/her successor(s) and/or dependants in the event of his/her exit, taking inter alia tax and estate duty implications into account.

The most important asset in any business is its people. The ongoing profitability and sustainability and as a result, the capital value of the business, are largely reliant on the input of the key employees in the business. If a key person was lost to the business as a result of for example death, then the business could suffer a direct loss because of decreased sales, the high replacement cost of a skilled employee, and/or the opportunity cost in the loss of profit/sales while a new replacement is being trained. Thus, the goal of our keyperson assurance solutions is to mitigate the financial risks that sprout from the death, disability and/or severe illness of key persons in your business.

Ensuring that the estate of an owner or partner is protected against creditors of the business for which he/she had signed surety in the event of his/her death, disability and/or severe illness. With contingent liability cover, the owner or partner enters into an agreement with the business whereby the business is obligated to use the proceeds to pay the liability for which the owner or partner had stood surety. This is usually backed up by a cession of the policy to the funding institution for security.

When the inevitable happens and a co-owner dies, the business normally faces a turbulent time. The business may be catapulted into a crisis. Remaining owners, employees and clients need to come to grips with the fact that one of the main drivers of the business is no longer there. Normally despite the best efforts, it impacts on the business in the critical 6 to 12 months after the death of such an owner. The operations may be temporarily impeded to such an extent that the business will not be able to pay its overheads. This problem is compounded if the business had a single owner. The goal of our business overheads protection solution has is to protect the business against the turbulent time directly after an owner or partner dies. It does so by creating funding to secure at least the overheads of the business for a period of between 6 and 12 months.

Turnkey buy-and-sell arrangements, including the review or drafting of buy-and-sell agreements, to ensure that the surviving owner(s) or partner(s) in the business are able to continue operating in the event of the death, disability or exit of a partner or owner. Our solutions will ensure that the estate of the owner or partner is protected against claims by the business and that they and/or their families are fairly compensated for their interest. Conversely, it will also protect the remaining owner(s) or partner(s) against claims or insistence by the estate of an owner or partner, heirs or third parties who offer to purchase their interest.

The primary purpose of a buy-and-sell arrangement is to provide the surviving partner(s) with cash to purchase the interest of a deceased or disabled partner. A buy-and-sell solution presents a smooth exit to a partner in the event of death or disability. This agreement ensures continuity of business at the demise, disability or exit of an owner. The alternative to insurance is to borrow, from a commercial bank, the money needed to buy the deceased owner’s share. However, even if the business is successful in obtaining such a loan, the terms and repayment term could possibly make it unaffordable from a cash-flow point of view. In most cases, insurance would therefore be the more affordable solution.

The family of an owner or partner is seriously exposed to a financial shock that follows his/her death. The income that the owner or partner drew from the business cannot continue, since he/she can no longer contribute to the business. If the income is earned as a salary, this salary stops at the death of the owner or partner, leaving the family without income. This is especially important if the business is going to close down or if the family cannot harvest the true value of the business after the death of the owner or partner. With our income replacement solution, the objective is to minimise the financial shock on the family of the owner or partner by replacing the income that he/she drew from the business.