What are trigger events and what happens after them?
Published 21 Mar 2019
Life can throw you curve balls. As a business owner, succession planning is a vital part of trying to prepare you for these unexpected scenarios and is essential when buying or starting a company. Accounting for what happens if a trigger event occurs is important for the long-term health of your organisation.
What are trigger events?
Trigger events are defined circumstances that cause your business succession plan to come into play. A range of trigger events exist, and it's important to consider as many as possible within your business succession plan to ensure the smooth running of your organisation.
Some of the main scenarios to consider are:
- Serious illness.
- Total and permanent disability.
Why a business succession plan is important
A trigger event can have a large impact on your company. However, the right business succession plan helps make any necessary transition proceed as smoothly as possible, allowing you to focus on more vital matters.
It's also important for your family that your organisation is prepared in case of a trigger event - if something happens to you it ensures they are treated fairly.
You want your business to have a set plan in place should a trigger event happen. It's often a time of great stress, and having a way forward already laid out that you've agreed upon helps prevent conflict around decisions.
Some of the things that your business succession plan should cover if a trigger event occurs includes:
- What happens with the position affected? For example, is it split between remaining partners, passed onto a key employee or does it go to a family member?
- How is the value of the business affected, and how can you mitigate the impact?
- At what age are you, or your business partners, looking to retire at? How might you want to leave the company, and when?
Often times businesses use a buy/sell agreement to figure out the answer to these questions, to ensure the legalities are properly dealt with.
Knowing what trigger events you need to account for and creating an effective business succession plan for the different scenarios involved is essential. Don't leave it up to chance - make sure you contact the expert legal advisors at Malouf Solicitors today to protect the future of your business.
Please call us on 02 8833 2000 to speak with a lawyer
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