Industrial equipment manufacturer
Our client was introduced to us by their accountant who had recently rewritten the company’s shareholder agreement and carried out a valuation.
Client: Industrial equipment manufacturer
Location: Basildon
Service: Shareholder Protection
Description
The client had recently restructured some of the shares. In doing so, the founder and father of the other shareholders had his shareholding value frozen at 50% of the value of the company. The remaining shareholders, 4 siblings, were required to ensure life insurance would be maintained on each of their lives, in line with the value of their shares.
Key Challenges
There were two key challenges with this case. Whilst three of the shareholders were employed by the business, the other was employed abroad in the Cayman Islands. They had been resident and domiciled there for over 10 years. The second issue was that one of the employed shareholders had several health risk factors that meant a number of the insurers would not accept him.
Outcome
By ensuring the shareholder protection was structured correctly, the issue of the life insured residing abroad was mitigated. Through detailed pre-application underwriting and by managing the clients’ expectations, favourable terms were issued and placed on risk. By working with the accountant and client, we were able to ensure they were not in breach of their shareholder agreement and have cover in place to ensure that should one of the shareholders pass away, the business has the funds to buy the shares back.