Background

Tom, Dick & Harry are the shareholders & directors of an IT Company. Our Research & Marketing Department identified them as potential clients as they matched the profile of our existing clients as they had a turnover of between £1m & £10m, they were profitable, they had been established for more than 5 years & they were based within our ½ hour of our office. We set about contacting them; we were able to secure a meeting initially with Tom who was concerned about the risks of being in business & the financial implications for his young family. A further meeting was arranged with all 3 at which time the extent of their collective concerns were expressed. 

Client Concerns & Immediate Issues

• The clients required clarification on how their families would obtain value for their shareholdings in the event of their demise
• They wished to consider the financial impact of any one of them being unable to perform their duties - How would they replace the lost revenue?
• As a Company that is growing & making money – they never seemed to have any money
• They required clarity on their current arrangements & how effective they were in meeting their objectives 

Our Initial Recommendations & Action

1. Reviewed the existing Shareholders Agreement – considering not only what each Director contributed by way of time, money etc but also considered what happens if things go wrong!
2. Agreed a Business valuation – in consultation with their other professional advisers
3. Established an annual review at which the valuation would be updated & agreed
4. Implemented Holborn’s Ownership & Profit Protection Strategy – formal & tax efficient agreements to enable full value to be realised for shareholdings & for business profits to be protected. 
5. Arranged for the Drafting of a Company Will & re-drafting of Personal Wills
6. Reviewed existing Accounts & Revenue to un-earth significant cost savings

The Results so far

• In the event of a future dispute a robust shareholders agreement will minimize possible ambiguities or mis-understandings
• The Ownership & Profits of the business are protected in the event of the death or disability of the shareholders / directors
• All solutions were funded from ‘un-earthed’ savings
• A regular system of review meetings ensures their stated aims and objectives are achieved

“It’s funny how once the man disappears – the Company soon follows”

Please note: This document is provided as a working example and for information purposes only this should not be construed as financial or investment advice.

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