Farm business transition
12 October 2015
Farm succession is a topic of conversation that can be overwhelming and is often put in the ‘too hard basket’. However, ignoring ‘the elephant in the room’ creates a lack of confidence and uncertainty for all involved. Without a succession plan in effect – for both planned and unplanned events – how will family farm businesses transition successfully?
What is succession planning?
“Many people have a mis-conception of what succession and transition is all about,” says Jonathan Forrest, a Director of Boyce Cooma.
“People have the tendency to look over the fence and make judgements about what they perceive has worked and what hasn’t worked for others, rather than focusing on their own situation.”
Jonathan acknowledges that every business is different, as are the individual families and farming properties involved. Family members have to take ownership of the process and outcomes, while professionals such as Boyce can help in facilitating and navigating families through the important steps that need to be considered.
“I won’t by any means pretend that it’s easy, because it’s not, but it is an extremely valuable and important consideration for any business,” said Jonathan.
“We are often asked, “When is the right time?” and whilst there is no ‘right time’, planning should start early. However, this will depend upon the individual circumstances,” said Jonathan.
“In our experience, as you age you become more dependent on yourself and it becomes increasingly difficult both mentally and physically for farmers to do everything that is required to run a farm on a daily basis. It’s a simple fact of life that we lose the capacity to function as well as we did in our younger years.”
Challenging, but rewarding
It is a challenging process. Often family members have different expectations in regard to future ownership, assets and aspirations within the business. Jonathan believes that families should not focus solely on family members when it comes to succession and transition.
There are various options to consider when transition occurs; such as leasing, employing managers and contract help which can provide the opportunity for someone to remain living on the farm, while someone else takes greater responsibility for the day-to-day operations. Farm land is an investment and can be held by families for multiple generations, even though there’s not a family member looking after the daily business.
Boyce’s key value ‘Care of Clients’, assist many businesses with transition from one owner/operator to the next, whether it’s family or an outsider who is becoming involved through lease, sale, or another arrangement. Unfortunately it’s not all about succession within a family, as there may not always be family members who want to become involved with the family business.
“There is not always a family member to ‘come home’ and run the family business, but that doesn’t mean that the farm assets have to be sold,” said Jonathan.
Jonathon is from a family farming business himself and worked through a transition with his grandparents, uncle and parents, Jonathan understands what is involved.
Boyce have knowledge, insight and experience having assisted hundreds of business owners with various forms of transition.
“We are very passionate about our clients maximising their wealth and it’s very rewarding for us to be part of the process of helping them through the business lifecycle,” said Jonathan.
“Proactively working with our clients from the beginning with their future in mind, we don’t want to just observe from the sidelines with such important matters we actively plan and implement transitions.”
Boyce work closely with a range of advisers; from solicitors, consultants and facilitators and Jonathan stresses the importance of communication.
“There are a lot of issues to consider when effectively carrying out transitions – asset protection, tax, farm productivity, budgeting, investment planning and estate planning. It is important that advice is given by the best team, backed with the appropriate legal agreements.”
Jonathan acknowledges that this ‘succession issue’ will never go away. It is extremely important for any business and that’s why Boyce have a well thought out structure and plan for the transition of our business owners. If this is something you haven’t considered in the past, then there’s no time like the present to start taking some action!
For more information or to start the conversation on succession, contact your local Boyce director.