Running a business with a partner is often rewarding. You share the risks, the responsibilities, and the rewards. But what many owners don’t consider is what would happen if one partner suddenly passed away.
It’s not a pleasant thought, but it’s one of the most common and most dangerous risks facing SMEs today.
At Wyke Business Protection, we recently worked with an organisation that highlighted exactly why shareholder protection is essential, and how a joined-up approach between advisers, accountants, and solicitors can deliver a gold standard solution.
The Problem
Two unconnected shareholders owned their company on a 50/50 basis. Each of them had their own next of kin, but neither family had any involvement, knowledge, or interest in running the business.
Here’s the risk…
If one shareholder died, their shares would automatically pass to their beneficiaries, there was no protection solution in place.
This wasn’t a “what if” problem. Without action, this business was at risk of disputes, instability, and potentially even collapse.
The Work We Did
At Wyke Business Protection, we don’t buy into a one-size-fits-all approach. This case needed a tailored, legally watertight solution. Here’s how we approached it:
- Detailed Fact-Find – we carried out a full business protection fact find to understand both shareholders’ needs, preferences, and long-term goals.
- Market Research – we researched policies across the market, carefully considering underwriting challenges linked to the shareholders’ medical histories.
- Valuation Alignment – we liaised with the company’s accountant to ensure the sum assured was appropriate to the business valuation.
- Legal Integration – working closely with the legal advisers, we agreed on the best mechanism: an own-life in trust policy, supported by a bespoke shareholder agreement and a cross-option agreement.
This last point is crucial. Many insurers offer “off-the-shelf” cross-option agreements, but these aren’t tailored to the company’s articles of association and often include no liability for errors.
By contrast, the bespoke agreements prepared by the clients’ solicitors ensured the protection plan was fully integrated and legally sound.
The Gold Standard Solution
The outcome was a robust, comprehensive shareholder protection plan:
- Each shareholder now holds a policy written in trust.
- Legal agreements ensure that if one dies, the other has the right to buy the shares.
- The family of the deceased receives fair value for the shares without conflict.
- The business continues without interruption, disputes, or unwanted outside influence.
This connected approach. financial advisers, accountants, and solicitors all working together, provided a solution that not only protected the shareholders but also strengthened the business for the long term.
Why This Matters for SMEs
This case isn’t unusual. Thousands of SMEs in the UK operate with similar structures: a small number of shareholders, no formal protection agreements, and no plans in place for what happens in the event of death or serious illness.
Without shareholder protection:
- Families inherit shares they may not want, causing stress and disputes.
- Surviving shareholders may be forced to buy back shares with personal wealth.
- Shares could be sold externally, putting the company at risk of instability or takeover.
- Businesses risk losing the confidence of staff, clients, and lenders.
In short: without shareholder protection, you’re leaving your business exposed.
The Benefits of Shareholder Protection
The good news? With the right advice, these risks can be avoided. Shareholder protection:
- Keeps control of the business in trusted hands.
- Ensures beneficiaries receive fair value for shares.
- Provides financial security without draining personal wealth.
- Protects jobs, clients, and the long-term future of the business.
For us, it’s not just about protecting your company, it’s about protecting your family, your partner’s family, and the legacy you’ve worked so hard to build.
A Final Word
This case shows how important it is to act before it’s too late. Business owners often put shareholder protection off because it feels awkward, complicated, or something to “sort later.” But the risks are too great to ignore.
At Wyke Business Protection, we work alongside your accountants and solicitors to create bespoke, legally sound solutions. No shortcuts, no one-size-fits-all, just straightforward protection strategies that give you confidence and continuity.
Ready to talk protection? Book a free consultation today!