Now that you’ve decided to sell your company and retire, your primary goal is to extract maximum value from the business you’ve worked hard to build.
Unfortunately, too many exiting entrepreneurs (as well as their legal, financial and business advisors) leave too much cash behind because they fail to recognize the enormous value hidden within one of their most overlooked and underutilized business assets.
Companies purchase numerous business life insurance policies for risk management, employee benefit and investment purposes. When a company is up for sale, some of these life contracts may become obsolete because the reasons for their purchase are no longer relevant. And after a company is sold, additional business life policies may outlive their usefulness.
Historically, exiting entrepreneurs faced limited disposition options when their changing needs rendered their business life policies unnecessary: allowing the policy to lapse, thereby forfeiting the value of all premiums paid or surrendering the policy to the original insurer for its cash surrender value—an amount which doesn’t reflect its true value.
Today, an innovative asset optimization technique, a life settlement (the sale of a life insurance policy to an institutional investor for a cash payment that is greater than the policy’s cash surrender value), can convert the hidden value in no longer needed qualified business life insurance contracts into significant immediate cash. This windfall can be used for any purpose, including facilitating the sale of your company for the desired price and on favorable terms.
Although selling your unnecessary business life policies in the secondary life insurance market can be profitable, navigating the labyrinthine life settlement marketplace can be challenging. The nascent life settlement industry, in general, lacks ample due diligence and transparency as well as knowledge of and services responsive to the unique needs of retiring entrepreneurs in the process of selling their companies.
Analyzing the expendability of your business life policies, coordinating the sale of your obsolete policies with the sale of your company, safeguarding your privacy and securing the highest quality institutional offer demand specialized advisory skills in exit planning, business life insurance and life settlements. Working with Legal Life Settlements, an independent specialty M&A advisory firm with expertise in these disciplines, ensures a successful, efficient transaction.