Business development Hunter Ruthven · 13 June 2017
Do you have a business contingency plan in place if you die?
New research has suggested more than half of SME company owners have no business contingency plan, such as details in a will, in place if they pass away. It may sound like a morbid subject, but Legal & General’s State of the Nation’s SMEs report has highlighted a lack of planning when it comes to a will or special arrangements following the death of a director or owner. The report also found that only 26 per cent of shareholders would buy the stakes of their fellows if they died, with 51 per cent relying on personal wealth to do this. A total of 800 small and medium-sized businesses were questioned by Legal & General, revealing only 41 per cent have a shareholders? agreement. Richard Kateley, head of intermediary development at Legal & General, said: The death of a business owner can be hugely significant should there be no plan in place or an arrangement regarding company shares. this could lead not only to shares being tied up in probate, paralysing an SME’s operations if this was a majority share, but could see the beneficiaries of these shares becoming involved in the business, whether or not they have any aptitude. Kately also suggested a worse-case scenario also being a possibility the selling of shares to a competitor, meaning the surviving owners losing control of their business. Some 32 per cent of British SME owners have not reviewed their articles of association in the last year, while 40 per cent have not done the same for the partnership agreement.
ABOUT THE EXPERTHunter Ruthven
Hunter Ruthven was previously editor of Business Advice. He was also the editor of Real Business, the UK's most-read website for entrepreneurs and business leaders at the helm of growing SMEs.