One Step at a Time

July 5, 2011 10:00 AM
One Step at a Time

Transition takes a structured process.

When Jim and Greg Moes, their spouses and their families signed on to be a Farm Journal Legacy Project case study family, they knew they’d have to make some tough choices and difficult decisions.

They recognized the need to transition their business to the next generation, though, and know it was something that had to be done. The Farm Journal Legacy Project team of experts is working with the Moeses to take a structured approach, moving through six steps:

Consultation. The first meeting helps the family define their succession intentions for the operation, owners and family. It includes input from all active family members and a discussion of succession goals.

Discovery. In this step, we collect emotional and factual information and examine the familial, operational and financial situation. We confirm the succession objectives and evaluate current business structures, accounting history and estate planning documents.

Preliminary plan. In the next step, we identify areas that need to be addressed. We create a cash flow model for each family member and make preliminary recommendations for ownership transition, leadership development, estate planning and financial security.

Final plan design. The final plan is drafted based on the preliminary plan, taking into account the family’s suggestions and further research. We finalize recommendations for all phases of the transition and draw up a schedule to help achieve our goals.

Implementation. This is the process of creating the legal documents, writing the financial instruments and learning the practicalities of leadership. In this step, we work with the family’s professional advisers to ensure compliance with the plan and timely implementation.

Annual review. A succession plan must remain fluid and adapt to changing legislation, business environments and family relationships. It also must be applicable to a growing operation and provide a wide scope of opportunities for additional family members and long-term employees.

Twelve months after implementation is an ideal time to evaluate the plan’s progress and update succession objectives. It is essential that the plan still reflect the family’s goals and objectives. If not, we make modifications to meet the new needs.

The planning team assembled to navigate through these steps will vary according to the complexity of the situation and the goals of the family operation. It can include attorneys, accountants, financial planners, family counselors, appraisers and ag/dairy advisers. Any or all of these experts might be required to construct a viable succession plan based on the goals, circumstances and assumptions of the family.

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