the ten commandments of succession planning (final 2)

SUCCESS IN SUCCESSION Practical considerations for a positive

outcome

FARM SUCCESSION “Ten Easy Steps to Success”

FARM SUCCESSION “Ten Easy Steps to Success”

OVERVIEW

• MY STORY– OUR FARM– OUR FARM BUSINESS

• WHAT WE LEARNED– SOME FUNDAMENTALS– GETTING STARTED– ADVISERS– “TEN COMMANDMENTS”

JUST ANOTHER FAMILY FARM• ‘Bukalong’, Monaro region of

SE NSW • First settled in 1846 by

George Garnock• Homestead built in 1868• Six generations• Longest private rainfall

records in Australia– And some of the biggest

droughts, floods and snowfalls

JUST THE USUAL FARM DYNAMICS

• Complex ownership and management structure

• Extended family involved in local district

• Limited off-farm investment

• Low input history• ‘Active’ and ‘passive’

contributors

FARM DYNAMICS

FAMILY DYNAMICS

A SUCCESSION PLANNER’S DELIGHT!

SOME FUNDAMENTALS• Succession is a process

– A means to an end…not an end to a means

• There is no ‘formula’– No proforma– No recipe for success

• Requires commitment– Of time and money– From direct stakeholders and advisers /

facilitators • The pathway that you end up on will

(almost certainly):– Change (and/or)– Differ from your expectations

SUCCESSION IS MULTI-FACETED

• OWNERS• MANAGERS• EXPECTATIONS• ASPIRATIONS

• PAST DEBTS / LOANS• BEQUESTS AND PLEDGES• INFORMAL OR FORMAL

• ON-FARM• OFF-FARM• IMMEDIATE• FUTURE

• FARM AND OFF-FARM• AGED CARE /

ACCOMODATION• DIVIDENDS & RETURNS

FUTURE NEEDS

ASSETS & LIABILTIES

PEOPLECOMMITT-MENTS

SUCCESSION IS MULTI-FACETED

SO…WHERE TO NEXT?

GETTING STARTED

1. Make a start!

GETTING STARTED

1. Make a start!2. Gather information– Assets and liabilities– Future needs (aged

care, etc)– Loans and pledges– Plans, maps, etc– Valuations, Wills, etc

“In God we trust. Everyone else…bring

data”

W. Edwards Deming

GETTING STARTED

1. Make a start!2. Gather information3. Encourage family

participation– Concerns and fears?– Objectives and

aspirations?– Expectations?

GETTING STARTED

1. Make a start!2. Gather information3. Encourage family

participation4. Communicate the

process

GETTING STARTED

1. Make a start!2. Gather information3. Encourage family

participation4. Communicate the

process5. Seek professional

advice…but do your homework

A NOTE ON PROFESSIONAL ADVICE…

A NOTE ON PROFESSIONAL ADVICE…

PROS / OPPORTUNITIES• Independence /

impartiality• Competence • A proven process /

experience• Networks (to other

advice, advisers, etc)

CONS / THREATS

• Cost• Baggage / history• Personality /

incompatibility • Inaccessibility

A NOTE ON PROFESSIONAL ADVICE…

• Don’t leave it too late– Clean-ups take time and money

• You generally get what you pay for– “Pay peanuts - get monkeys”

• Word of mouth is often a good start• Check for “baggage”– Genuine independence is essential

• Seek someone who can commit to the process and to getting a result

THE TEN COMMANDMENTS…

TART NOWNDERSTAND & RESPECT EACH OTHERS’ FEELINGSOMMIT TO THE PROCESSOMMIT TO WHAT IS AGREEDQUITABLE IS NOT ALWAYS FAIR (AND VICE VERSA)EEK & VERIFY SOUND, PROFESSIONAL ADVICEET AND ADHERE TO “THE GROUND RULES”N-LAWS CAN BE OUTLAWSBSERVE AND FOCUS ON THE OUTCOMEEVER LOSE PERSPECTIVE

SUCCESSI

ON

THE TEN COMMANDMENTS…

TART NOWNDERSTAND & RESPECT EACH OTHERS’ FEELINGSOMMIT TO THE PROCESSOMMIT TO WHAT IS AGREEDQUITABLE IS NOT ALWAYS FAIR (AND VICE VERSA)EEK & VERIFY SOUND, PROFESSIONAL ADVICEET AND ADHERE TO “THE GROUND RULES”N-LAWS CAN BE OUTLAWSBSERVE AND FOCUS ON THE OUTCOMEEVER LOSE PERSPECTIVE

SUCCESSI

ON

Likelihood of success

1 No. ofpeople

involved

α

THE TEN COMMANDMENTS…

TART NOWNDERSTAND & RESPECT EACH OTHERS’ FEELINGSOMMIT TO THE PROCESSOMMIT TO WHAT IS AGREEDQUITABLE IS NOT ALWAYS FAIR (AND VICE VERSA)EEK & VERIFY SOUND, PROFESSIONAL ADVICEET AND ADHERE TO “THE GROUND RULES”N-LAWS CAN BE OUTLAWSBSERVE AND FOCUS ON THE OUTCOMEEVER LOSE PERSPECTIVE

SUCCESSI

ON

END