Business Financial Security
How to secure the knowledge and leadership that drive your company’s success.
The benchmarks of your company’s success are probably tied to your key people. These are the ones who start the innovations, who shepherd operations, who build the relationships. Losing
their expertise and vision is a tremendous risk to your company’s success and corporate financial security. Most companies agree with that assessment, but they do not measure the risk appropriately.
Have you considered all the factors
in quantifying the impact of losing
someone critical to your company’s
success? Here are areas to find gaps
in your planning today.
How much time and money should you budget to
recruit and develop a replacement?
What will the loss of a key person mean to your
company’s proprietary knowledge and systems?
What will happen to sales revenues, market
share, and client goodwill with the loss of key
people?
Will production capacity fall off?
Will cash flow fall off?
How will your credit standing with lending
sources and suppliers be affected?
When the key person is a shareholder, the stakes increase and the impact of their loss expands. Buy-sell agreements are absolutely necessary, but even with proper funding they do not solve all the problem by themselves. Some buy-sell agreements unavoidably place the company and the deceased owner’s family in adversarial positions.
The survivors’ cost basis
Creditors’ rights
Ratio of ownership desired after buy-out
Tax brackets of owners and corporation
Number of shareholders, differences in ages and
stockholdings
Certainty of performance or unreasonable
accumulation of surplus
Constructive ownership
Corporate AMT
Policy maintenance and stockholders’ right to
acquire policies
Would more information help your future decisions?
Consult Leisman Library
Email Bill Leisman