Succession and farm transitions are a challenging topic that takes a lot of preparation. Tim Cobb, the Owner and President of Farmland Company, says there are different types of transitions.
Cobb says, “There’s two that are most important. That’s an operational management transition as well as an ownership transition, and those items don’t normally happen at the same time. When you talk about day-to-day operations as young people are coming into an organization, they should get an opportunity to manage and do a few things that will allow them to make some choices. Maybe control some budgets, or potentially also sell some grain, and do things like that. On the other side, there’s that ownership transition that might come later, but it also might include other stakeholders. And so when you’re talking about succession, there are lots and lots of things to consider, and ownership transition normally takes a little bit more time.”
The length of a farm transition will depend on several factors. He says, “It depends on the operation. It depends on the amount of communication, which is important, but really, factors that play into it can make it so a management transition can look like three to five years and an ownership transition, honestly, depending on the equity and the amount and the size of the farms, they can take longer than that. It is not unexpected for us to see something take between five and eight years. And as we watch that, it’s good to have that continuity. You get the relationships with the banker, and you get the relationships with the other players that are involved in this.”
Conversations ahead of time are key to a smooth transition. Cobb says, “Communication is always the key, right? And we need to listen twice as much as we speak. I can remember early on, in my own family, that would just start talking to me about a few things, and it would be consistent, and it was always consistent. That’s important, that the message that comes from those who would like to have succession happen, that it is as consistent as possible, and that it starts early. And that you include the players as often as you can.”
For more information on transitioning to the next generation and finding expert help, go to asfmra.org.
Story courtesy of the NAFB News Service