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| Like many of my graduating classmates, I am weighing the possibility of returning home to our family farm in the future (3-5 years). The difference is that many of my peers' farm operations are set up as a proprietorship, partnership or various LLCs with few "hands in the cookie jar.". Our family farm is a Corporation that contains 6 stakeholders, each with varying opinions on farming. As the only interested family member from the 3rd generation of our farm, I would like to develop some kind of plan to come back. Has anyone gone though this process or currently facing this issue? |
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Midwest | You ask the right question about being fairly compensated. Without knowing the family dynamic, it is hard to answer. Have the buyout, thing in place and understood before getting too far in. Also if there is dishonesty, selfishness, personality disorders, or what ever, get that all cleared up now. |
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SW Iowa | I would suggest you get away from that corp and set out on your own. Family squabbles go on forever and can undue many a good deal. We are approaching a peak in farm earnings, probably in the next 9 mo, and there may be a following slight dip for a couple of years in start-up costs, letting you in before the next run up. Perhaps your family corp will rent you the machinery you need to farm your own place. Keep it business with them
Edited by Itchy 2/28/2012 12:45
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| I agree, with that many share holders it will be interesting. 1 idea, have an independent appraisal of corp value on your entry date. Agree to buy out other shares at that price over years. Would probably need to pay out dividends along the way too until they are bought out.
Or set up your corp and slowly buy shares at going rate as you can, eventually having your corp own everything.
#2 is tough because you wouldn't have access to assets for collateral.
The company's current accountant may have the best answer for you. Will be good idea to pay for a consultant somewhere along the line. |
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| "1 idea, have an independent appraisal of corp value on your entry date. "
potential market value vs book value vs closely held value can cause some anguish |
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| Probably need to prove to everyone that's not dad or grandparents why your worth more than Pedro at $12/hour before you talk about buyouts. |
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| What does the corporation do? Does it operate? Is it just a land holding entity? Need more info. |
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mn | as others have said go out on your own |
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The Far East...of Nebraska. | He didn't say the stakeholders were negative people, let's not be quite so negative. This corporation needs a manager and operators. There's no reason you couldn't do some work for them and do a little bit of your own thing as well. You can prove your worth to the stakeholders and see where that gets you in the future. Maybe nowhere, but hopefully somewhere. This is an opportunity not a curse! Just be sure to build up your own equity all the while. Just my 2 cents! |
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| My plan is to take an off-farm opportunity to both build experience and reassume family that I'm not just Old Johns son or Bobs grandson. The corp contains all entities -land, buildings, operations, etc. this corp was assembled in the late 70s, which may have made sense at that point in time, however it could be a disaster for any other family member to buy-in. I haven't heard of many others my age who are taking on this similar type of scenario. Any success stories? |
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| What makes you think any shares are for sale? And if they are, what is the price? It may take 10 lifetimes of off-farm work to buy one share? Also, those that own shares may be restricted on sales. Some stock restrictions say the share is first offered back to the corporation, then to other shareholders.
Unless you have a pocket full of change, you may be just another hired hand.
Partnership/LLC/corporation/joint venture/individual/trust, no matter what entity, you still have the same problem. Someone else owns the assets, and you want in.
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Farm Corporation Succession
