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Personalised Strategies for Business and Personal Insurance
Located in Dunedin and Central Otago | All enquiries welcome

What is a shareholder buy and sell agreement?

When going into business with other people, figuring out what to do if one of you were to die or become permanently incapacitated is probably the last thing on your mind. However, if left unresolved, should this unlikely event manifest itself, your business could have a difficult time operating while ownership issues remain unresolved.
Shareholder buy and sell agreements help businesses prepare for this unlikely situation by outlining what happens in the event of the death or total disablement of a shareholder. Supported by a shareholder buy and sell insurance policy, which provides the funds for the remaining shareholders to buy out the shares at a pre-agreed value, it provides certainty for everyone involved.
Contact Insure Otago today to discuss shareholder protection insurance.

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Insure Otago can help you with insurance related to Shareholder Buy and Sell Agreements

  • Helps create certainty both for the business and the family or estate of the shareholder
  • Insurance provides funding for any required shareholder buyout at an agreed value
  • Gives the family of the deceased or incapacitated shareholder a fair value for their shareholding
Contact Insure Otago to work through insurance related to shareholder buy and sell agreements

How does shareholder buy and sell insurance work?

In the event that a shareholder unexpectedly exits the business due to death, disability, or another unforeseen circumstance, securing the funds for a timely buyout can be challenging. Shareholder buy and sell insurance provides a practical solution by funding the purchase of the departing shareholder’s interest, based on the terms set out in a formal buy and sell agreement.
This type of cover ensures that both the remaining shareholders and the exiting shareholder’s family or estate have clarity and certainty around the process and agreed valuation. At Insure Otago, we provide advice on structuring this insurance to align with your shareholder agreements and safeguard the long-term stability of your business.

Why are shareholder buy and sell agreements and insurance needed?

Dealing with the unexpected loss of a business partner is difficult enough on its own. Adding to that the uncertainty and complexities of working through what happens to their share in the business during that time can only make things harder. What’s more, you could effectively end up in business with your former shareholder’s estate, their family, or their beneficiaries, who might not necessarily be interested in the business, have different priorities for the business, or might want to sell to an outside party.

What are the benefits of shareholder buy and sell insurance?

Shareholder buy and sell insurance, along with the agreement, helps ensure a fair value is paid for the former shareholders share of the business, and eliminates the need for remaining shareholders to attempt to finance the buyout at short notice. This also provides certainty around the continuity of the business and its ownership, reducing disruption to the business. Ultimately, it makes the transition much easier during a difficult time for all parties involved.

How Insure Otago can help...

Insure Otago can help you understand the type and level of shareholder buy and sell funding that is suitable for your business. Contact us today.
Personalised Solutions for Business and Personal Insurance
Located in Dunedin and Central Otago | All enquiries welcome