Better managing succession – key lessons from Pastoral Profit workshops
Let’s face it – in agriculture, succession is an “old” word and it generally has negative connotations.
It conjures up images of family disharmony –aggrieved parties who didn’t receive the “proper value” or “their fair share”; estrangement of family members from others – or disintegration of a formerly profitable, orderly and focused business.
Alternatively, many don’t consider that during any such (orderly + focused) transition process, there is in fact significant opportunity for business growth and enhanced value to be realised. Scale may be increased, investment for growth sought, management capability and innovative thinking enhanced, as well as the opportunity to do something new or different (maybe for some family members).
Should Succession get a rebrand?
Therefore – does Succession need a ‘rebrand’? Should it now be referred to as a “business growth and transition” process, where it is viewed in a positive frame, in light of these opportunities?
This was the flavour of conversation at the recent Pastoral Profit workshops – where the intention was to provide a different take on this “old” topic – by focussing on how to manage an orderly business growth and transfer process – where everybody wins.
The workshop included a range of valuable perspectives, including those from:
- Anthony Coates, OM – former owner of Eidsvold Station (Santa Gertrudis Stud #2) – presented the successful principles he and family learned from his recent experiences with a successful succession process
- John Whitfield – TSA Agribusiness – discussing the concept of Land as a Product and Asset and key ways to maximise its “value” to the business
- Gordon Stone – ABDI – presenting on how to undertake a structured, disciplined approach to ensuring the business value is maximised.
Key messages from the workshop
When ‘thinking differently’ (in other words proactively and positively) about a potential business transfer scenario, some key steps to achieve this successfully include:
- Clarity on the outcome. You must be clear on what you are seeking, as well as the mutual benefits for all involved – and have a laser focus on achieving that. It is easy to get derailed by the emotions and other parties’ indecisiveness.
- Work out what you believe is adequate time to go through the process – and then add some. It always takes longer than you think – and there will always be delays.
- Engage a specialist, independent, external party to assist in managing the process – before you believe you need to. Using an independent third party assists in removing the emotion from the process – and generally (should) provides a different perspective.
- Structure the process around a formalised plan.
- Break the process down into a series of key decisions / tasks. For many, the process as a whole seems insurmountable – and this inhibits people’s willingness to go on the journey, let alone start.
- Start documenting everything as soon as possible – ie meetings / conversation outcomes, various party’s interests etc – to ensure an accurate record from the beginning – and help with ‘the plan of attack ’.
- Assess every part of the business as a separate business unit –ie land, the product (livestock / grain / horticulture), plant and equipment, staff and people, your knowledge – and consider the value of each independently and collectively. Again, use an independent third party.
- Engage family – or those affected – as early as possible. When people feel their needs and values have been considered, they are much more likely to have ownership over the process – and outcome.
- Don’t be greedy – everyone must get something out of the transition. Many people don’t consider how destructive the emotional toll can be – that may result from a drawn out and difficult process. The peace of mind gained by an orderly and timely resolution is often underrated. And, sometimes less is more (by taking less now, this may provide the opportunity to achieve much more in the future – both tangible (financial) and intangible (emotional) outcomes).
- Use independent third parties wherever possible to maintain the credibility of the process, and to avoid conjecture and disagreement between parties (such as around valuations etc).
- Strive to maintain open lines of communication with everyone – especially family – and always seek to “be the bigger person” when disputes arise.
- Acknowledge the emotional aspects – and respect different people’s drivers and accept they may be (sometimes vastly) different than your own. Remember we are dealing with human nature here – and everyone responds to change very differently.
- Some things are special – and value is subjective. For example, a respectable and well-kept garden might be one of the proudest achievements to some, but mean nothing to others. Practice respect, and be considerate.
Webinar: “How to effectively tackle Succession – lessons from Pastoral Profit”
Recently we ran a webinar where Gordon Stone (Director ABDI) got together with Anthony Coates AM (former owner of Eidsvold Station) to recap on the key messages from the recent Pastoral Profit workshops held in Charleville and Longreach. The idea was to provide a different take on an old topic – by discussing perspectives and strategies for business growth and transfer – using Anthony’s case as a real example.
12 Month Agri-Business Program
If succession is one of your biggest challenges, the 12 month Agri-Business Management Program works through business growth and transition in a structured, orderly fashion. By having multiple generation attend the program, many previous participant businesses have used the program as a way of getting all parties aligned and on the same page. This has allowed a more open conversation around succession, and helped these businesses move forward in the planning process.