Perpetuating your business

1. Gerald McMichael Jeff Shupe Perpetuating your business A planning guide for a successful exit strategy

2. Perpetuating your business • A Shareholder Agreement is ESSENTIAL •  Addresses the transfers of shares • Typically accomplished through stock redemption • Covers what happens in an involuntary departure of shareholder such as: • Condition of shareholders: • Death of shareholder • Disability of shareholder • Financing Method: • Life Insurance • Disability Insurance • Insurance for key employees • Key-Man Life Insurance • Business Overhead Insurance

3. FIVE BASIC METHODS OF PERPETUATION: • Method: • Transfer/Sell to family member……………….36% • Sell to a 3rd party……………………………..…42% • Transfer to existing partner……………………17% • Merge, then retire………………………………..2% • Retain business until death…………………….6% • Other…………………………………………..…...3%

4. Claims-made policy Example

5. Directors’ and officers’ Liability Policy benefits • Covers “Wrongful Acts” • Covers business interference and market misrepresentation • Coverage for breach of contract and fiduciary duty • No discrimination exclusion applies in standard policy • Provides defense for wrongful enrichment claims • Provides defense coverage for claims related to fraud, criminal, or willful conduct until proven • No built in exclusion for professional services • Definition of insured includes directors and officers, spouses and domestic partners, and employees • No retention applies if no finding of liability