IT Partnership – Shareholder Protection

Having originally met at University, Adam, Maheep and Simon started their partnership when they were in their early 30’s.  Each of them had worked in the IT sector, from consultancy to software developers and felt their combined skill set would serve a gap in the market for SME’s.

The early years were about reinvesting the profits back into the business, then after just five years, thanks to a number of very loyal clients and large projects, they had expanded their team considerably meaning the business was financially stable and they enjoyed a healthy increase in their income.

However, three partners have different personal circumstances, with marriage, divorce and bachelorhood, which also meant their income requirements and business aspirations were not aligned.

Their main concerns were:

• Who inherits their share of the business in the event of death and ill health?
• How can the remaining business partners be protected?
• What is the effect of any premiums as one of them smokes?
• Adam wants to exit the business at age 50, how can they plan for this?
• Their income and expenditure needs were very different, how can they equalise this?
• How can they incentivise their senior managers.
• Hospital waiting lists are only getting longer, how can they access private treatment?

How we helped the partnership:

• Working with their accountant and solicitor, we assessed the current and projected value of the business, put life cover in place and a suitable agreement so that the proceeds were dealt with correctly.
• Looking at their pension provision, we calculated how much was needed to be invested to provide the required income, this also helped them with tax relief on their contributions.
• Discussed providing different levels of employee benefits and presenting this to each group.
• Put in place a Private Medical plan so that private treatment is provided, with the option of extending this to the members families, and the tax treatment of the premiums.

Benefits for the partners were that each of their different objectives were met and that they had a better understanding of what each one would like from the business.

Their employees were better catered for, productivity and retention increased, home working reduced, with the emphasis on team and not me, which improved company culture and the bottom line.