If you are part of a Business Partnership how can you ensure that your business is able to continue if the unexpected occurs either to you or your Business associate? How can you continue providing for yourself and your loved ones if you die, become critically sick or disabled? If you are the surviving partner what arrangement can be pursued NOW to ensure that you retain ownership of the business and the decedent's heirs can be paid for their inherited share of the business?

1. BUSINESS
CONTINUITY &
SUCCESSION
PLANNING:
PARTNERSHIP
Compiled by: Reginald Michael Alleyne

2. Partnership
• What are the options if a partner dies or becomes disabled :
1. Liquidate
2. Sell out to ex-partner’s heirs
3. Reorganize the partnership with family member as new partner
4. Reorganize the partnership with a new partner who purchases the ex-
partner’s interest
5. Reorganize the partnership by purchasing the ex-partner’s family’s interest

3. LIQUIDATE

4. Liquidation
• Liquidation results in having to divide anything left with:
 Deceased partner’s heirs
 Surviving partners

5. Liquidate
• Concerns with liquidation:
 Under what conditions would the business have to be liquidated?
 What provisions have been made to divide the assets among ex-partners
and ex-partner’s family?
 How will pressure from creditors for settlement of claims be handled?
 How can sale of assets at bargain prices be prevented?

6. Liquidate
• Concerns with liquidation:
 How will the partner’s family survive without their primary source of
income: the business?
 What will be the impact of taxes on each partner’s family?
 Could any of the accounts receivables be collected?

7. Liquidation: Resolution
• The negative impact of liquidation & division of remaining assets
for heirs can be mitigated if:
 Sufficient life/disability insurance proceeds are reserved to replace the
lost income and wealth of the business

8. SELL OUT TO EX-PARTNER’S HEIRS

9. Sell out to Ex-Partner’s Heirs
• Concerns with selling-out:
 What are the surviving partner’s options after the business is sold?
 How will the purchase price be fairly set?
 How would the heirs obtain the needed cash for purchase?

10. Sell out to Ex-Partner’s Heirs
• Concerns with selling-out:
 Would the heirs be willing to forego immediate profit to re-build the
business?
 How will the change affect the loyalty of customers? Suppliers?
Employees?

11. Sell out to Deceased Partner’s Heirs: Resolution
• Life/disability insurance is needed for:
 purchase by deceased partner’s heirs
 added security of family income
 estate taxes

12. REORGANIZE THE PARTNERSHIP WITH
FAMILY MEMBER AS NEW PARTNER

13. Family as New Partner
• Concerns with family as partner:
 Is the family member willing to assume the partner duties required?
 Does the family member have the competencies needed to run the
business?
 Is the family member compatible with all partners?

14. Family as New Partner
• Concerns with family as partner:
 Will the family member be willing to forego immediate profit to re-
build the business?
 How will the new partner affect the loyalty of customers? Suppliers?
Employees?

15. Family as New Partner: Resolution
• Issues with family as new partner can be reduced if a properly
managed buy/sell agreement is drafted
• A buy/sell agreement sets the value of the company that is
equitable to both survivors and heirs
• It protects the interests of both the deceased co-stockholder’s heirs
and the surviving stockholders

16. Family as New Partner: Resolution
• A Life/Disability insurance funded agreement:
 assures heirs and survivors of financial security
 helps strengthen current and future credit position
 ensures the continuation of an ongoing business
 helps maintain the value of a successful business

17. REORGANIZE THE PARTNERSHIP WITH
A NEW PARTNER WHO PURCHASES EX-
PARTNER’S INTEREST

18. New partner buying out Ex-Partner’s Interest
• Challenges that may arise with new partner include:
 Is the new partner willing to assume the partner duties required?
 Will the new partner have a personality compatible with the other
partners?
 Does the new partner have the appropriate talents needed to run the
business “now”?

19. New partner buying out Ex-Partner’s Interest
• Challenges that may arise with new partner include:
 Would the new partner be willing to work as required to help the
business survive?
 Would the new partner agree to a deferral of profit as necessary to re-
build the business?

20. New partner buying out: Resolution
• Issues with an outside owner can be reduced if a properly managed
buy/sell agreement is drafted
• A buy/sell agreement sets the value of the company that is
equitable to both survivors and heirs
• It protects the interests of both the deceased co-stockholder’s heirs
and the surviving stockholders

21. New partner buying out: Resolution
• A Life/Disability insurance funded agreement:
 assures heirs and survivors of financial security
 helps strengthen current and future credit position
 ensures the continuation of an ongoing business
 helps maintain the value of a successful business

22. REORGANIZE THE PARTNERSHIP BY
PURCHASING EX-PARTNER’S INTEREST

23. Purchasing Ex-Partner’s Interest
• Concerns with purchasing ex-partner’s interest:
 What provisions are made so that the business can reasonably continue
without any one partner?
 Would these provisions be feasible if the partner dies earlier than
initially estimated?
 Is there an agreement in place which fixes the price for the buyout?

24. Purchasing Ex-Partner’s Interest
• Concerns with purchasing ex-partner’s interest:
 How will the price be fairly set?
 Do the cash flow options accommodate changes in the value of the
company?
 Where will the money come for the buyout?
 How will the buyout affect the loyalty of customers? Suppliers?
Employees?

25. Purchasing Ex-Partner’s Interest: Resolution
• Issues with an buying out an heir can be reduced if a properly
managed buy/sell agreement is drafted
• A buy/sell agreement sets the value of the company that is
equitable to both survivors and heirs
• It protects the interests of both the deceased co-stockholder’s heirs
and the surviving stockholders

26. Purchasing Ex-Partner’s Interest: Resolution
• A Life/Disability insurance funded agreement:
 assures heirs and survivors of financial security
 helps strengthen current and future credit position
 ensures the continuation of an ongoing business
 helps maintain the value of a successful business

27. If you would like to discuss in more detail any of
the preceding topics I can be contacted as follows:
†Facebook
†By Email at: rmalleyn1@gmail.com
†LinkedIn: https://www.linkedin.com/in/reginaldmichaelalleyne/

28. Documents that may be requested
• Certificate of Incorporation (Company license)
• Notice of Directors
• Bye-Laws (how the company is governed)
• Articles of incorporation
• Declaration of compliance
• Registered office (notice of address)
• Notice of Secretary