Business Succession Planning

1. Succession planning
Protecting your business and equity for the future
PROFESSIONAL ADVICE | PERSONAL SERVICE | GENUINE INTEREST

2. Something to
think about
If you, or one of your
business partners had died
yesterday, what does your
business’ future look like?
Buy/Sell (or Equity) Insurance is about planning
for the life of your business after your death, or
the death of one of your partners. It is also about
making sure that the most important people in
your life get the benefit of an important asset.
What is a buy/sell
agreement?
A Buy/Sell agreement is an agreement that
enables the purchase of a partner’s shares in
the occurrence of a defined trigger event.
The purchase can be funded personally or via the
business, however it is more commonly done so
via the use of insurance. This can be more cost
effective and provides access to ready capital.
Is it really necessary?
If there are two partners in your business, the
chances of one not making it to age 65 is 19%.
Suffering death or total and permanent disability
is a 35% chance. Alarmingly, there is a 55%
probability of one partner either dying, suffering
from total and permanent disability or having a
trauma event before age 65. The more partners
the higher to odds of something happening to at
least one.
No of
partners
Death Death or
TPD
Death or TPD
or Trauma
2 19% 35% 55%
3 27% 47% 70%
4 35% 58% 80%
5 41% 66% 87%
Based on a 45 year old male. Probability of death based on Australian
Life Tables 2003-2005. Probability of Total and Permanent Disability
and Trauma based on MLC experience.
How it works
Agreement The partners sign an
agreement enabling the
purchase and sale on certain
trigger events.
Funding
mechanism
Each partner has an insurance
policy on his or her life.
Beneficiaries The beneficiary of the policy is
the partner’s estate.
Precedent The Agreement stipulates
that the funds received for
the insurance policy are for
the payment of the partner’s
shares in the business
Win-win The estate receives the
payment and remaining
partners receive the shares.
I have been working closely with Stewart
over the past three years, putting together
a strategy to restructure my various Super
funds and also secure advice with regard
to our family business. I have found Stewart
to be extremely helpful in not only giving us
excellent advice, but also the fact that he
has the ability to go through the strategy
and explain everything in layman’s terms.
We recently sold our family business and
were fortunate to be in a position to show
a reasonably solid capital gain. Stewart
prepared a strategy in conjunction with our
accountant to ensure we paid no Capital
Gains Tax. Needless to say we were
delighted with this outcome.
Steve Cairns

3. Success in succession planning
What you should think about, when thinking about succession planning:
Client
Adviser
Project
Management
Strategic
Business
Planning
Estate
Planning &
Distribution
Strategy
Counselling
Personal
Insurance
Asset
Protection
Business
Insurance
Tax
Planning
Super
Planning
I have been receiving investment advice
from Stewart Hynes for the past 5 years.
Initially he helped me with planning for
my retirement but more recently he has
counselled me about ways to go about
selling my small business.
We had many open discussions about
whether to sell the business or employ
people to run it for me. Stewart listened
to what I was saying and then offered
sound advice, bearing in mind what my
personal preferences were. He gave me
“food for thought” as well as giving me
some contacts whom he thought may
help me.
Stewart is a great communicator and
in conjunction with my accountant his
advice regarding Capital Gains Tax and
how to put a price on the business was
invaluable. He gave me confidence to
follow through and successfully sell my
business. I can highly recommend him.
Jan Thompson

4. The information (including taxation) contained within this document does not consider your personal circumstances and is of a general nature only - unless otherwise
stated. You should not act on it without first obtaining professional advice specific to your circumstances. Stewart Hynes is an Authorised Representative of
RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429
Stewart Hynes
CFP, DipFP
m: 0419 301 604
e: stewart.hynes@riballarat.com.au
Specialist business adviser
Stewart Hynes has over 23 years’ experience
in the financial services industry, joining National
Bank in 1989 before moving into the financial
planning space with GIO Australia in 1995.
Stewart joined RetireInvest Ballarat in March
1997, becoming a Partner in 2000, after which he
assumed sole control as the Managing Director
following a full acquisition in December 2003.
Over the next 5 years the business expanded
and grew strongly until he commenced his own
Succession Planning strategy, which included
selling down equity and taking on a business
partner.
After taking the opportunity to acquire another
financial planning business in St Kilda Road,
Melbourne he managed this business until it was
merged in 2008 and was successfully sold in
December 2011.
During the 2011/2012 financial year Stewart took
an extended break away from the business whilst
deciding where he would devote his energy.
RetireInvest | RI Advice Ballarat
200 Sturt Street, Ballarat VIC 3350
t: 03 5333 4950
f: 03 5332 6774
www.riadvice.com.au
With a strong passion and desire to help other
small business owners realise their dreams and
establish a work/life balance they deserve, he now
works exclusively with business owners to make
sure this happens.
Stewart holds the internationally recognised
Certified Financial Planner (CFP®
) status along with
a Diploma in Financial Planning.
Our services
Business succession planning
Shareholder/Partnership Agreements
Buy/Sell Agreements - Insurance Funding
Solutions
Keyman Revenue/Capital Protection
Finance and Mortgage Broking
Investment advice
Superannuation advice, including SMSF
Investment Strategies
Debt Management
Ongoing Investment Advice
Retirement Planning
During the past four or more years I have worked
with Stewart consistently in my transition to
retirement – of which I am currently in semi-
retirement mode.
The process has been involved but Stewart’s
expertise, in conjunction with my accoutant, in
arranging and overseeing the sale of the equity
of my business, addressing capital gains issues,
taxation related matters, relationship planning
including financial agreements and will; it has
been an easy transition to the stage I am now at.
Our final objective is still ongoing and I am
extremely confident that working with Stewart,
both up to my retirement and beyond, all of my
financial requirements will be set securely in place.
Jeff Lillingston