Skip to main content

Rounthwaite Wealth Management

  •   Call us 519-673-0920
  •   Get in Touch
  •   Client Login
  • CLICK HERE FOR INSTANT TRAVEL INSURANCE QUOTES

Rounthwaite Wealth Management

  • Home
  • Who We Are 
    • Our Team
    • Our Philosophy
    • Our Process
  • Our Services 
    • Our Services
    • Investments
    • Insurance
    • Retirement Planning
    • Managing Your Finances
    • Asset Allocation
    • Business Succession Planning
    • Charitable Giving
  • Resources 
    • Useful Websites
    • Calculator Library
    • Video Library
    • Blog
    • Comments from The Institute for Advanced Financial Education
  • Testimonials
  • Contact

Helping You

manage the changing face of life

Working together to create

Financial freedom for you

Our Mission

your success is our only mission

  Previous   Next

    You are here

  1. Home
  2. Our Services
  3. Business Succession Planning

Business Succession Planning

The death of a partner or major stockholder in a business can have devastating effects on both the business and the deceased partner’s surviving family.  The business is concerned with gaining control of the deceased partner’s interest at a fair price so that it can continue operations without interference from the surviving family members.  The family members are most concerned with receiving as much money as possible for their interest in the business and for capital that may be needed for estate settlement purposes.

 

The Need for a Written Agreement

Absent a written agreement, the competing interests of the business and the family members could lead to major conflicts, litigation and possibly the forced liquidation of the business.  A buy-sell agreement can ensure that the business interest of the deceased partner will transfer in an orderly manner to the benefit and satisfaction of all parties.  With a buy-sell agreement in place, the stability of the business for it clients, employees and investors (or creditors) is more assured.

Key elements of a buy-sell agreement include a mutually agreeable sales price and terms of the sale.  The agreement needs to be funded in order to ensure that the capital is available at the time of the death of a partner.  Life insurance provides a cost effective means of creating the capital necessary to buy out the interests of the family and establish a reserve for the business to use  to continue its operations.

 

Types of Business Owner Buy-Sell Arrangements

Entity Plan: Under this arrangement, used when there are multiple owners, each of the business owners has a separate agreement with the corporation or partnership as the entity.  The entity, per the buy-sell agreement, will buy the deceased partner’s interest at his or her death. 

Cross Purchase Agreement: Used in situations where there are two or three owners, a cross purchase agreement is established between each of the owners. At the death of one of the owners, the surviving owners agree to buy a proportionate share of the deceased owner’s interest.

Buy-Sell arrangements are a simple, yet effective way for business owners of privately held companies to plan for the orderly transfer of business interests where two or more owners are actively involved in the business. In addition to securing the needs of the surviving family members and ensuring the continuation of the business, a buy-sell arrangement also ensures each owner that there is a buyer for their business interest at a fair price.

Business succession planning involves legal, tax and personal financial issues. Guidance from a qualified attorney or tax professional is strongly recommended.

For more information on business succession planning, contact us today.

Our Services

  • Our Services
  • Investments
  • Insurance
  • Retirement Planning
  • Managing Your Finances
  • Asset Allocation
  • Business Succession Planning
  • Charitable Giving

Book a Meeting

Tell a Friend

Instant Quotes

BASIC HEALTH & DENTAL   HEALTH & DENTAL, ENHANCED

INSTANT TRAVEL INSURANCE

ASK AN ADVISOR

Suite 400, 200 Queens Ave, London, ON N6A1J3

  •  Tel: 519-673-0920
  •  drounthwaite@amradvisors.com
  •  wrounthwaite@amradvisors.com
  • Sitemap
  • Legal, privacy, copyright and trademark information
  • Mutual Fund Dealers Association of Canada

The contents of this website do not constitute an offer or solicitation for residents in the United States or in any other jurisdiction where either David & Will Rounthwaite and/ or Sterling Mutuals is not registered or permitted to conduct business. Mutual funds provided through Sterling Mutuals Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus carefully before investing. Mutual funds are not guaranteed, their values fluctuate frequently and past performance may not be repeated.

Insurance products, and other related financial services are provided by David & Will Rounthwaite as independent insurance agents, and are not the business of, or monitored by Sterling Mutuals Inc.

Legal Information     Privacy Information     Client Compliant Procedure 

© 2022 Rounthwaite Wealth Management. All rights reserved.

Website Design For Financial Services Professionals