Planning for a successful succession
Relationships ruined and businesses going off the rails. Professional succession planner Joan Baker has seen the ugly side of farm succession.
The author of Your Last Fencepost and Why A Man is Not A Financial Plan brought the controversial issue of farm succession to the fore at a Beef + Lamb New Zealand seminar in Winton last month.
More than 200 people attended the seminar which indicated there was huge interest in a subject which has the potential to create massive family rifts.
Baker said farm succession didn't have to be equal but all parties needed to be treated fairly.
"You have to get it right otherwise issues have the potential to fester and become toxic," she said.
Farmers often put farm succession on the backburner, because they were scared of conflict, and many didn't look at it until they were forced to think about their own mortality, Baker said.
"The challenge is to make the transition as smooth as possible and as early as possible."
Baker said motivation for farm succession was often triggered by a series of d's - death, debt, divorce, diversification or downsizing.
"I have a lot of people saying they will get round to it," she said.
Baker said it was much easier to get into a farm and to grow your wealth than it was to transition out of it.
She suggested getting family, particularly children, involved from the early stages, so they were aware of how the farm business worked.
Baker said farm succession was a process, not an event, and it was the ultimate test of any business.
She said while the son who has worked on the property for many years may expect to take over, a daughter may have a better business head and may be more suited to the role.
"You want the business to thrive, not just survive."
Baker said for many farmers farm succession brought up a fear of loss of control.
"We all like being top dog and often the farm isn't just a business - it's your life," she said.
Farm succession often exposed a lack of foresight, poor planning, poor legal structures, under- development of people and a lack of communication.
Baker said farmers should separate management of the farm from ownership.
"You don't want four siblings with 25 per cent each in the business but no MD [managing director]."
The Southland Times