The importance of business succession planning cannot be over-emphasized. In 2019, The Swatow Restaurant chain had 18 restaurants. When it closed down, it created the loss of more than 500 jobs. The owner of the restaurant, Mr Yan bought over the Swatow restaurant in 1988. His sudden death in Japan after suffering a stroke caused chaos in the Singapore operations in Singapore. Business came to a stand still - no money was coming in to Singapore to fund the operations and pay the suppliers. His wife came to Singapore to settle the company's messy affairs. As a tai-tai living the high life, she had no clue about the business and its operations. Her presence was of no help and she returned to Japan. What was worse was that the Changi airport location which was making money was not allowed to continue business as it was Mr Yang who had signed on the lease.
Business succession planning with us
1. Our professionally-trained (Estate and Succession Practitioners) can provide corporate opinions on the business after listening to your needs
2. In the event of a death by one of the owners, the business can be transferred with little fuss
3. Careful planning provides an income source for the deceased's family and loved ones or a stream of incoming funds for a critically ill owner
4. Minimizes uncertainty in the event of a death of any owner to the business
5. Minimizes potential disputes among surviving owners
6. Allows the business to operate smoothly
A Buy Sell Agreement is a part of business continuity planning. It is a legally binding agreement which will come into effect when one of the owners of the business passes away. The buy sell agreement will govern the terms and conditions for buying out the shares of the deceased party or if the party becomes permanently incapacitated
Imagine: Mickey and Minne are good friends and have decided to venture into a business selling merchandise. They worked extremely hard and throughout the years, their business grew tremendously. Unfortunately one day, Minnie passes away due to a car accident. Minnie's husband, Donald, inherits the shares of the business that Minnie's owns from her last will & testament. Donald has always been in the aviation line and knows nothing about merchandise businesses. Mickey now faces the situation of having to run the business with someone with no experience or knowledge about the business at all, while Donald refuses to sell away the shares to Mickey because he is afraid of not getting a good deal. As a result, the business starts to deteriorate"
Minnie left her shares to Donald so that Donald can be taken care off financially if she passes on. What happens if the business is no longer making any profits? How would the shares be useful for Donald in this situation? Would Donald be better off if Minnie has gotten a buy sell agreement with Mickey for an agreed amount to be paid to Donald in the event of her demise? It is in everyone's intention to make sure that our loved ones are well taken care of when we pass on. Business owners, especially businesses with more than one owner, should act immediately and consult us for a proper buy sell agreement
When to do a Buy-Sell Agreement?
While preparing a buy-sell agreement may not seem to be a priority at this moment to you, especially when you have just started on your business or when your business is on expansion mode, it is always better earlier while parties are able to engage in meaningful conversations and negotiations. This will ensure that the business continues to reap in profits in the long run
Other common business documents we can help with through our preferred partners
1. Employment Agreement
2. Service Agreement
3. Non Disclosure Agreement
4. Shareholders' Agreement
5. Partnership Agreement
6. Suppliers Agreement
7. Website Terms and Conditions