Context
A mid-sized agri-business entered investment negotiations with foreign partners. Investors identified a concentration risk: the business was heavily dependent on the founder for operations, deal flow, and institutional relationships. Without a continuity plan, investment terms would be penalised or withdrawn.
The founder approached us to clarify what structure would protect the business if he became incapacitated or passed away, without distorting ownership or succession.
Client’s Goals
- Maintain investor confidence during negotiations.
- Protect business continuity without selling equity or over-insuring.
- Align insurance strategy with long-term estate plans and business governance.
Our Recommendations
- Establish a key person insurance policy owned by the company, with the business as beneficiary.
- Determine coverage based on the financial exposure of the business, not a standard multiplier.
- Align proceeds to specific purposes:
- Interim leadership costs
- Capital cushion for operations
- Creditor/security obligations
- Integrate the policy within a wider continuity plan.
- Position the policy within investment negotiations as an active risk mitigation layer.
Outcomes (To Date)
- Investors accepted the policy as evidence of continuity planning.
- The business proceeded with negotiations at the original valuation with continuity risk discounted.
- Internal governance has a defined response mechanism for unplanned succession scenarios.
- The key person cover now supports broader fiduciary planning for the founder’s estate.
