Business Succession Support

We support smooth business succession in preparation for diverse financial needs associated with a change of the business owner.

What Is Business Succession Support?

If anything happens to the business owner, a great burden is imposed on his/her company and family. A variety of financing needs may arise, including funds for inheritance tax, funds to cope with a deterioration in financing due to a decline in credit status after the change of the business owner, funds to purchase dispersed stocks and business assets, and funds to be procured to purchase stocks, etc., from the previous business owner in the case of third-party succession through MBO or EBO. It is possible to prepare for these situations by utilizing corporate life insurance.

Funding Risk That May Arise at the Time of Business Succession

Deterioration in Financing

There are the risks of a decline in sales and deterioration in relations with business partners associated with a change of the business owner.
Surge in the valuation of own stock

If the proportion of the company’s own stock in the inherited property is high, it may be difficult to pay inheritance tax.
Repayment of Borrowings

A successor or heir who is not involved in the business may take over joint and several guarantee obligations.
Division Satisfactory
to the Heir

The concentration of its own shares in the successor with the aim of smoothly inheriting the business may result in a poor balance with other heirs, which may cause a fight for succession.
Purchase of Shares

In the case of the purchase of dispersed shares or third-party succession, funds are necessary to purchase shares, etc., from the previous business owner.
Financial Impact of Contributing Funds to the Family Members of the Business Owner

There is a risk that financial contributions need to be made from the company to individuals for death benefits or share repurchases, etc.

Four Types of Funds for Business Succession

1

Operating Fund

It is recommended to prepare an operating fund for the time being in preparation for a decline in sales and relationships with business partners.
2

Fund for Repayment of Borrowings

It is necessary to prepare a fund in the case of a problem in maintaining the relationship with financial institutions.
3

Fund for Measures for Own Stock

The fund can be used to secure the tax payment fund for the heirs.
4

Retirement Reserve Fund

Secure a reserve fund for death retirement benefits in order to deal with the situation without hindering the company management.

How to Support Business Succession

1
Consultation

Please feel free to contact us if you have any concerns about business succession. We would like to ask you from the standpoint of an expert.
2
Suggestions

We propose a plan that meets your needs and issues, based on the use of corporate life insurance.
3
Conclusion of an Insurance Contract

We will conclude a contract as an insurance agent. We provide various support for the conclusion of the contract.
4
Preparedness in Case of Emergency of the Next-generation Business Owner

Business succession is not completed by transfer of management rights and own share. Preparation is necessary in case anything happens to the next-generation business owner.
5
Review of Insurance through Reorganization of Group Companies, etc.

Based on the reorganization of your group companies, we will examine and review the amount of coverage required according to the situation of each company.
6
Regular Maintenance

We will review the amount of compensation required and provide other support on a regular basis in response to the increase in stock price and net assets due to the growth of the company.

CASE STUDY

Wooden Construction Contractor

Net sales: Approx. 30 billion yen (group total)
Profit before tax: Approx. 3 billion yen (group total)

Situation and Issues

The chairperson, who is the founder, considers a guarantee for the president and vice president after taking business succession measures.
Since the price of shares held by the president and vice president is several billion yen, the inheritance tax burden will be enormous in the case of an emergency.
Because of the age of the next business owner, the president and vice president need to hold the shares for a considerable period of time.

Solution

The president and vice president purchase life insurance to secure death retirement benefits and funds for share repurchase in preparation for an emergency.
It is assumed that it will be used to prepare tax payment funds in the event of an emergency.

Contract Concluded

Long-term level term insurance

Pharmaceutical Manufacturer

Consolidated net sales: Approx. 50 billion yen
Profit before tax: Approx. 4 billion yen

Situation and Issues

The founder is the chairperson, and the successor is his eldest son who is the managing director.
No shares are held by the chairperson as a result of selling and exchanging shares to the holding company.
Since the holding company falls under a specified stock holding company, and the price of shares held by the managing director is currently several billion yen, the inheritance tax burden will be enormous if anything happens to the managing director.
The successor to the managing director has not been determined, and the managing director is expected to hold the shares for a long time.

Solution

The managing director purchases life insurance to prepare death retirement benefits and funds for share buyback in the event of an emergency.

Contract Concluded

Long-term level term insurance and whole life insurance

Support for Insurance Agency Operations / Transfer of Business Rights Overseas Business Support