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E ND | These problems aren't unique to farms but are unique to family businesses.
Bottom line for me is that family business and farm families need to draw a line in the sand at the point a child transitions from a paid employee to an "owner." The operation needs to be valued at that point, and ownership "shares" and value established for each owner and how that will work going forward as far as income/profit distribution on a regular basis. At that point the farming child is adding value and building equity in the entire operation through their work and decisions. Mom and Dad's equity continues to grow for another 30-40 years until they decide to retire. At that point the farming child(ren) know where they stand in the operation and ALL children split Mom and Dad's shares equally upon death or whenever that would occur. Need to build in a buy/sell agreement for current and future shareholders, they can continue to own and become part of the operation or they can sell out with the current owners having first right of refusal.
My $0.02. | |
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How to wrap my head around generational transitions/equity?
