Case Study - Death of a Business Owner

markblayney8
Mar 3
3 min read

Updated: Apr 19

An empty desk leff by death of business owner

What happens to a business when the owner dies or is incapacitated?

When a business owner that a company relies on passes away or is unable to continue, urgent action can be needed to cope with the situation.

If you're ever faced with this sort of crisis, this post is for you.

Don't let a death of business owner' be the death of a business

For many families, the business can be a significant asset in the estate and often the least prepared for a sudden change in ownership or control.

In practice, the death or incapacity of a business owner can therefore trigger immediate and difficult practical problems, including:

Loss of operational control where the owner was central to management, banking or key relationships, and disrupted or abandoned business sales and operational instability, affecting employees, suppliers and customers leading to the risk of significant and rapid loss of value.
Shares passing into an estate where beneficiaries may have little involvement in or knowledge of the business, and conflicting expectations within the family about ownership, control or whether the business should be sold.
Urgent liquidity pressures, including inheritance tax liabilities.

In death or sudden illness these issues can arise suddenly and place significant pressure on families and on the advisers supporting them.

The case study below of a recent situation we have dealt with illustrates the difficult commercial realities families have to navigate at the same time as dealing with bereavement.

Case study

The major shareholder and director of a family owned company died suddenly and unexpectedly.

This left no active shareholders or Directors with knowledge of the business, while the general manager was on the brink of retirement and the premises were left to a different family member, with an agenda to sell the site for re-development.

The family had mixed objectives including:

protecting the business and its long service (30 years+) employees,
preserving a rental income stream until the site could be sold, and
extracting significant value from the business.

All of these needed to be dealt with by a probate sale of the business which had to:

be completed quickly to avoid the trade unravelling, but
where in the absence of the deceased owner manager, normal Due Diligence, data, warranties and indemnities would not be available, and
the business clearly had no security of tenure given the plan to sell the site.

Within days of being introduced Resolution Incorporated was able to make a structured offer:

to complete within a timescale of weeks, and
which met all the family’s objectives.

Having carried the deal through the company is now trading successfully under new ownership.

We Don’t Advise on Exits. We Provide Them.

We believe situations like these require practical commercial support alongside legal advice to achieve the best available outcome for the family.

If you are facing a situation where our support in stabilising a business or providing an accelerated exit could be of assistance, we would be happy to discuss this with you in complete confidence.

Resolution Incorporated exists for owners who need a secure sale.

We are not: