What if a President of a Company Died?
Depending on the role, skills and ownership position of the president of a company, his death can cause a temporary interruption of a business's operations or a devastating series of problems the company can’t overcome. Understanding the ramifications of losing the president of a company and the steps a business can take to prevent or reduce the impacts of this loss will help you protect your company against this type of tragedy.
If the president is the founder of a company, she might take with her years of experience making and selling the business’s product. If the president was the creator of the product or service, the business might be left without an expert who can continue to modify and improve it as marketplace trends change. The president of a company often develops personal relationships with large customers, trade publication editors or publishers, conference and trade show owners and others who can help the business keep a high profile in its industry. Have your president designate one or more protégés or a successor with whom she will entrust her knowledge and to whom she will introduce contacts. Look into a key person insurance policy that pays a business for the loss of critical employees so the business can continue to function after the president dies.
When a president of a company is well-known and acts as the face of a business, customers, suppliers, vendors and other partners and allies transact business with the company, in part, based on their confidence in him. If he dies, this calls into question whether the company will continue to innovate, lead, maintain its position in the marketplace and survive the transition. Demonstrate the management strength of your business by having vice presidents and department heads write articles for industry trade publications, speak at conferences and attend industry events. Have your public relations representatives prepare themselves and the company to answer questions the marketplace might have in the wake of the president's death so you can minimize potential customer and partner flight.
If the president is an owner of the company and the business is not incorporated to continue running as a legal business entity after her death, the company might have to temporarily stop business. If the business is a partnership, the partnership ends with the death of the president unless the agreement designates who replaces the president. The surviving partners might begin to fight over who will control the business, how it will be run, who is allowed to take the president’s partnership interest or who will become the new president. The surviving spouse of a president or owner might sell or liquidate the company. Lay out the ownership transition in the event of a president or owner’s death to ensure a smooth change in ownership or sale of the business.
Depending on how the business is configured and the president’s board of directors or ownership role, the company and its executives might have to update the business’s incorporation papers, purchase new insurance policies, sign new signatory cards on bank accounts and negotiate new contracts. If the president did not leave passwords to computer accounts or the combination to a company safe, the business will have to act to gain access to these. Create a succession plan that includes handling the paperwork for any legal matters.