Insurance

Insurance

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Help your advisors help you by asking them . . .

• How do I ensure that my coverages are sufficient and up to date, both as an attraction for buyers and in the event that insurance will be part of the transition?

Be sure prospective buyers find your company adequately covered. 

If you are transitioning via a sale, review your insurance situation with an insurance professional to be sure there are no red flags that will scare off a prospect. If you are underinsured, this could signal mismanagement of the company or artificially high profit margins.  Key person insurance can be important to a buyer when certain employees are integral to a company's continued success.

Make sure your risk management program is ongoing and effective.

A comprehensive risk management and safety program can help in a sale. And lack of one can be a deterrent to buyers. Clean up any obvious safety hazards, and implement and enforce safety precautions if necessary. Depending on your business, prospective buyers will want to look at your accident and injury history, and you want as clean a record as possible. A well-trained workforce with a solid history of managing risk and maintaining safety will be much more attractive than one that will have to start from square one.

If an insurance policy will be part of your transaction, be sure it is in place. 

In some cases, and if your policy has built up sufficient funds, a company might borrow against the cash value of a policy to enable a partner or employee to buy all or part of the owner's stake. If this kind of arrangement will be part of your transition, work with your insurance advisor to make sure you have the coverage and flexibility well before you need it.

If you will be staying on with the company, make sure you have all necessary insurance protection.

If you plan to retain an ownership stake in the company or if you are staying on in a management capacity, you'll want to be sure all of your coverages are adequate and up to date. That way, you can be sure your investment is protected, even if you're not involved on a day-to-day basis.

Visit Demystifying Insurance for a more in-depth description of the various business-related insurance policies,.

These materials provide general information, and should not be construed as specific financial, insurance, tax, legal or accounting advice.  You should consult a qualified advisor for individual guidance 
in these matters.  More details