Farm and Business Succession Planning

Planning & Readiness

• Define your succession and retirement goals
• Decide whether transfer is to family, management, or third party
• Determine your desired transition timeline
• Identify whether control will transfer immediately or in stages
• Assess whether you need ongoing retirement income from the business
• Identify successor readiness and capability
• Review existing or draft new wills and estate plans
• Review shareholder or partnership agreements

Financial & Valuation

• Obtain a professional business or farm valuation
• Identify major assets and liabilities
• Review outstanding loans and security interests
• Analyze expected sale proceeds vs retirement needs
• Coordinate with accountant on tax implications

Family Transfer (if selling to family)

• Clarify which family members will be owners vs beneficiaries
• Address fairness vs equality among heirs
• Document family transition agreements
• Define roles and compensation expectations
• Plan governance and decision-making structure

Third-Party Sale

• Prepare confidentiality agreements (NDAs)
• Prepare due diligence disclosure materials
• Negotiate purchase price and payment structure
• Negotiate representations and warranties
• Structure deposit and closing terms
• Define transition services period (if you stay temporarily)

Who Gets To Keep The Business?

Succession Planning is a significant part of the Estate Planning for any Business Owner. This is particularly true for Owners who are involved in the day-to-day operation of the Business. We often refer to these people as Owner/Operators.

There are many Small Business Entrepreneurs and Farmers who are planning to exit the day-to-day operations of their business or farm and need to develop an exit strategy in consultation with their financial and legal advisors.

The exit strategy may involve the transfer of ownership and control of the business or farm to a new generation of family member(s) or third-party purchaser(s) while maintaining sufficient financial resources to provide a retirement income.

The factors to be considered while in the process of Succession Planning are too numerous to review in this short summary. However, it is important to consider the timing of the transfer and the steps that will need to be taken to prepare the business enterprise or farm for the transfer.

You will need to develop a succession plan that will implement the transfer of the ownership of the business or farm and the managerial responsibility to the next generation or third-party purchaser.

Many owners are not ready to retire at the same time that the children, or the third party purchaser, are ready and willing to start running the business or farm. Life is complicated. Everyone's life circumstances are different and therefore transfer arrangements must be custom crafted to meet the specific situation. Most owners need to make long-term plans for the transfer of ownership while remaining involved in the day-to-day operations as the plan gets implemented.

Succession Planning involves determining the optimum means by which to transfer the assets and management of the business or farm while protecting the retirement income of the current owner.

For more information on these matters kindly contact our Law Office. Our office hours are Monday to Friday 9 a.m. to 5 p.m.