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Road Map to a Legacy

July 1, 2010
 
 

 

The Dell family was lost. Although the road to farm succession was paved with good intentions, trips to accountants and attorneys had always ended in more confusion than direction for the Westminster, Md., farm family. They were struggling to incorporate the hopes and dreams of four generations and six separate families.

Strong emotions and fear of change were hampering the business. The depressed dairy market was putting financial pressure on the farm. Some partners wanted to abandon the dairy and others wanted to save it. Land purchased with development plans was being questioned in view of the down housing market. The division-of-labor lines were starting to blur and different personalities were beginning to interfere with the decision-making process.

"We were all still physically working hard at our respective farm jobs and all still respected each other," says Greg Dell, one of the two sons in the second generation. "At the same time, we were all afraid of change and, ironically, the inability to find a way to change was eating away at us."

One of the first items of business for Farm Journal succession planning expert Kevin Spafford and his Legacy Project team was to prepare a written plan to chip away at the family’s succession issues one generation at a time and help reduce indecision and frustration.

After months of work, the mechanism has been put in place for two family members to retire. A chunk of the dairy herd has been sold. In addition, a new attorney has been retained to write up the proper buy/sell agreements. The first steps have been taken to formally include the next generation of Dells into the farm operation.

ONE STEP AT A TIME. Fortunately, behind the fears that were holding back the operation were hard numbers. Each family member did his or her homework to provide the Legacy Project team with the figures necessary to reveal a complete picture of the farm’s financial health. Professional appraisals are often needed during this part of the planning stage to establish realistic values of what the farm is worth and to set up meaningful cash flows and budgets.

"Our main interest is to support the integrity of the operation and meet the family’s transition goals," Spafford says. "Succession planning must enhance the family’s financial security."

When the Dell family came to the table together, they were united in some goals and divided in others. The multigenerational nature of most family operations makes it best for the chore of succession planning to be accomplished in incremental steps.

"We’re handling the Dell business transition in two separate phases," explains Josh Sylvester, Certified Financial Planner and a member of the Legacy Project team. "Phase one focuses on the family members who want to exit the day-to-day farming partnership and set the stage for the ownership and leadership transition of the operation."

Spafford calls succession planning a team event that requires a "quarterback" or facilitator. Beyond himself and Sylvester, the Dells’ team now includes their banker, accountant and attorney. Other experts may be added down the road.

"To date, we have well over 100 hours of research and discovery on the Dell case," Sylvester says. "That’s the legwork that goes into the recommendations and written succession plan."

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FEATURED IN: Legacy Project - Legacy Project 2010 Report

 
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