Answered by Tom Conner
Any business that has an element of recurring profitability has a value attached to it which should be protected in the event of a shareholder death.
Many people choose to do this with Shareholder Protection Insurance.
There are various methodologies applied to valuing a business depending on its type and size.
More often than not we will work in consultation with the company accountant to place a suitable value on your business and shareholding for the purpose of Shareholder Protection Insurance.
One of the most commonly accepted methods of valuation would be applying a multiple to the net profit of the company, basing your Shareholder Insurance cover on your proportion of the total shareholding.
However, valuing the business is only the first step when it comes to Shareholder Protection.
You also need to ensure all of the relevant trusts are in place to ensure your shares are dealt with accordingly.
As part of our consultation process we will help you put in place all necessary trusts, with suitable executors appointed and a legally-binding Cross Option Agreement which ensures that the wishes of all parties involved are adhered to.
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