Business protection
Protecting what you’ve built, and the people who help you build it.
Most business owners plan for growth, opportunity and change. Far fewer plan for what happens if a shareholder, key employee or personal guarantor is no longer there.
We help you put the right arrangements in place to reduce risk, protect business continuity and provide greater certainty for shareholders, employees and families.
Why business protection is important
52% of businesses say they could cease trading within one year of losing a key person
40% of businesses have no formal plan in place for this type of event
A significant proportion of SME borrowing remains unprotected
Source: Legal & General, Business Protection State of the Nation's SMEs Report, 6th Edition.
When a business relies on a small number of shareholders, directors or key employees, the death or serious illness of one individual can affect ownership, cash flow, borrowing arrangements and business continuity. Business protection helps ensure the right plans are in place before they are needed.
Cover may cease if premiums are not maintained.
Key areas to consider
Business protection is not a single solution. It is a tailored strategy built around your ownership structure, key people and financial commitments.
Shareholder and ownership planning
If a shareholder passes away or becomes seriously ill, their shares would normally pass to their estate or family. The right arrangements help shares move in a planned way, give remaining shareholders the means to retain control, and treat the departing shareholder’s family fairly. Business protection should be considered a key component of the shareholder’s personal financial planning, ensuring you can work towards your personal financial objectives should the unexpected occur.
Questions worth asking
Is there a clear agreement covering what happens to each shareholder’s stake?
Would the remaining shareholders have the funds to buy those shares back?
Would the shareholder’s family receive fair value, on a timely basis?
Key person protection
Many businesses rely on a small number of individuals whose loss would be felt immediately through revenue, client relationships or technical knowledge. Key person cover provides capital to absorb that disruption, covering lost profits, funding a replacement or buying time.
Questions worth asking
How dependent is the business on specific individuals?
How long would it take to replace them, and at what cost?
What would the financial impact look like over the first 6–12 months?
Business debt and financial commitments
Where borrowing is supported by personal guarantees, the death or illness of the guarantor can create pressure on the business and the individual’s estate. Lenders increasingly expect protection to be in place as a condition of funding.
Questions worth asking
Which loans, overdrafts or director’s loans are personally guaranteed?
What would happen to those obligations if the guarantor were no longer there?
When were the arrangements last reviewed against the current debt position?
Protecting and supporting key employees
Structures such as relevant life cover can provide meaningful, often tax-efficient benefits for senior employees and their families, and support recruitment and retention of the talent you most want to keep.
Questions worth asking
Are key employees appropriately protected, alongside the directors?
Are existing benefits structured as efficiently as they could be?
Could this be part of a broader people and reward strategy?
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Business protection in practice
How business protection can safeguard ownership, revenue and continuity.
Example case study: Losing the person who drives the revenue
An IT consultancy depended on one senior salesperson, Matthew, for around half its revenue and most of its client relationships. When Matthew died unexpectedly, sales fell and clients began testing other providers. Key person cover would have given the business the capital to absorb the loss and recruit a replacement on its own timetable.
Example case study: A shareholder passes away, and the family arrives at the board
Jennifer, Michael and Priya co-owned a profitable business. When Jennifer died unexpectedly, the share passed to her new partner Oscar, who wanted to sell. Neither Priya or Michael had the funds to buy Oscar out, and he began pushing for higher dividends from the boardroom. A cross-option agreement, supported by appropriate protection, would have meant Priya and Michael had both the right and the funds to buy the shares back at fair value.
Start the conversation
We work with business owners and entrepreneurs to identify potential vulnerabilities, review existing arrangements and build protection strategies that support both business continuity and personal financial objectives.
Our process includes:
Understanding your business structure and ownership arrangements
Identifying key dependencies and financial exposures
Discussing appropriate protection options
Working alongside your accountant and other advisers
Supporting you as your business evolves