Continuity Planning

The continuity of your business is critical to long term enterprise value, regardless of which strategy you employ on your journey to Keep, Sell, or Grow your business.

Pre-Sale Strategies

Pre-Sale strategies can greatly enhance the family enterprise value when you consider inheritance, estate taxes, and generational legacy. Pre-Sale strategies should be considered 18 months to 5 years prior to an expected transition, or liquidity event. Programs for key employees and company leaders are important to maintain human capital through the transition process, such as STIP (Short Term Incentive Plans) or "Stay Bonus".

The Pre-Sales Process
1. Clearly defining objectives for the business owner(s)
2. Completing an informal business valuation
3.  Preparing the business owner for options available, pre and post transition or liquidity. 
4. Coordinating financial objectives in order to maintain lifestyle
5. Collaborating with legal and tax advisors to accomplish desired objectives 
6.  Presale process provides for completing the planning by the time of the transition or transaction

Business Valuation

Having an understanding of what your business is worth, is integral to your business and personal planning efforts. Business value protection planning is the process of de-risking the difference between liquidity value, and enterprise/ equity value.

Applications for Life provides a complimentary Business Valuation. Click the link below to request one today.

Request Applications For Life Business Valuation service today

Buy-Sell Funding

There are several ways to fund a buy-sell agreement, including the creation of a sinking fund (holding back business profits – creating an after tax cash reserve– to cover the cost of the buy-sell), agreeing to an installment sale (using existing company cash flow to make the installment payments), borrowing or life and disability insurance.

The Corporate buy-sell agreement seeks to meet the following objectives:

a) Assure Continuity of business ownership and control upon the death or disability of a shareholder or other triggering events such as retirement, termination of employment, divorce, etc.

b) Restricts the transfer of stock without the approval of the other shareholders.

c) Provide a market, and valuation formula, for the stock and liquidity inside a shareholder's estate.

Executive Benefits

An executive benefit plan is a contractual commitment by an employer to a select group of employees to provide supplemental retirement or death benefits at a future date. This allows the employer to reward and incent selected employees for performance and achieving company objectives.

Employee Retention

Employee retention refers to the ability of an organization to retain its employees. In a business setting, the goal of employers is usually to decrease employee turnover, thereby decreasing training costs, recruitment costs and loss of talent and organisational knowledge.

To improve employee retention, your employees should trust and believe in each other. When they value each other, they will help each other and work as a team. This will lessen internal conflicts, and create a culture of peer-to-peer recognition.

Having a high retention rate means keeping staff members long-term, resulting in less time and resources required for training new staff and having the loyalty needed to run a business. Consider the amount of time, resources, and money that goes into training a new employee.

Phantom Equity

A phantom stock plan is a deferred compensation plan that provides the employee an award measured by the value of the employer's common stock. However, unlike actual stock, the award does not confer equity ownership in the company. In other words, there is no actual stock given to the employee.

An employer enters into an agreement with selected employees. In accordance with the terms of the plan, the employer grants the employees a number of units or phantom shares. As described, phantom shares are usually redeemed in cash—the payment being treated like a bonus

Premium Finance

Premium is an amount paid periodically to the insurer by the insured for covering his risk. For taking this risk, the insurer charges an amount called the premium. The premium is a function of a number of variables like age, type of employment, medical conditions, etc.

Life insurance premium financing involves taking out a third-party loan to pay for a policy's premiums. This strategy may be useful to high net worth individuals (HNWIs) who don't want to liquidate assets to pay for costly life insurance premiums outright.

To finance a premium, the individual or company requesting insurance must sign a premium finance agreement with the life insurance premium finance company. The loan arrangement may last from one year to the life of the policy.