Create the Choice The Penmaen Family
Create the Choice The Penmaen Family
Create the Choice The Penmaen Family
1. Family members who actively work on the farm and have some ownership (directly or indirectly) � Overwhelming challenge for controlling ownership group is have to deal with everyone � s concerns PLUS their own � Does anyone else care about the farm as much as I do? � What does life look like after giving up controlling ownership and decision making? Can I do that? � How much $ do I need to retire and where will it come from?? 2. Family members who actively work on the farm but do NOT have any ownership � What do I have to do to become an owner? � What do mom and dad � s wills say? Do they have an estate plan? � Will I have to be an owner with my non-operating siblings? Why does a 6 even get to be an owner when they don � t work on the farm? � Will I have to pay for shares or will they be given to me? � Will I be a farm hand for the rest of my life? Will I ever be trusted to make important decisions? � Why does a 4 think they can boss me around when they aren � t part of the family? 3. People who are employees but do NOT have ownership and are NOT members of the family that owns the farm � Worry about job security if owners don � t have a plan or if the plan doesn � t involve keeping the farm in the family! � Am I out of a job if Bobby decides to come home from college � Will I always be a hired hand? 4. People who actively work on the farm AND have ownership but are NOT from the family that has the controlling ownership of the farm � Worry about next gen family members who come back to the farm � WHY?? couldn � t get a job??? � Worry about special treatment for family members (are they competent??) � Wonder about compensation for family members (is it fair wage) � Concerned about family issues (divorce, sibling rivalry) creeping in and impacting the farm � Do family owners (6s) really understand LT value of the strategic plan? 5. People who have some ownership in the farm but they are not family members and don � t actively work on the farm � RARE � Focus is on farm as a financial asset; performance; ROI � Will next gen run the farm profitably? What steps are being taken to ensure smooth transition? � No emotion; is it better for me to keep or sell this investment 6. Family members who have some ownership but DO NOT actively work on the farm � Should I be patient about getting $$ from the business? � Is the farm going to be profitable? � Often feel out of touch / uninformed about what � s going on � Prone to second guessing management � Is the farm just a financial asset to me or do I feel a sense of stewardship? 7. Family members who DO NOT work on the farm and DO NOT have ownership � Have opinions about future but lack power or influence � May be nostalgic about keeping farm in the family to respect elders � How can I teach my kids about what the farm means to me when I don � t own / work
Governance = communication and decision Ownership � Owners meetings making � Critical from the start � Approve major transactions � Requires a bit of structure � Review financial results � scalability � Family employment policies � How to evaluate and compensate Family meetings family members � Traditions and celebrations � Who can own shares in the business � Family history � Dividend targets � Family values / mission / vision � Education Family trust � Code of conduct � Trust advisory committee � Resolving family conflicts � Philanthropy Overwhelming, yes, but as you move forward through transition / family grows Business will need some professionalization � BoD � independent? � Advisory board Pick a circle you are primarily operating � Strategic plan development and from; start to practice some of the oversight concepts; recognize different � Approve compensation and dividends perspectives, systems overlap (pebble in policies pond) � Represent interests of ALL shareholders
Tool to ease loyalty and entry of dedication family and possible members succession to into partial more full ownership, ownership. promotes
This tool helps enables the can promotes loyalty and business owner to freeze the dedication as there is a value of the business at a potential for succession to particular point in time by full ownership. By easing creating preferred stock, new leaders in to ownership which does not appreciate in you have the chance to value, and then transferring evaluate them and assess the common stock to his or their commitment to the her heirs. Since the majority vision of the future that has of the shares are preferred been agreed upon. You can and do not appreciate, establish goals and estate taxes are reduced. milestones for the new owners to meet before distributing more ownership. An Estate Freeze is a tool that can be used to ease entry of family members into partial ownership. It
The idea of a family trust is divorce or to protect the ownership of marriage your assets. The trust breakdown provides a mechanism to pass family assets to future situation or in the generations. This allows you event of death to control how your wealth is � Control over shared. Ie you can say when and how you want it assets held for the distributed. benefit of others It is a way to give money in � Flexibility - in stages and allow children to best learn how to deal with estate and it. succession There are a number of pros planning to establishing a family trust � . � Confidentiality � Ensure your children not � Avoiding probate their partners keep their and succession inheritance. duties � To protect assets � Providing for against business
Many financial business investments owners rely for on their retirement is business to tied up in generate 100 the farming per cent of operations. their wealth, Nearly all of and are their therefore personal invested assets are farm in only one related. asset. The largest share of the parents
Think of the option of building maintaining wealth ownership of outside your your business business not and as a selling it defensive when and if strategy but you wish. as one that At the very can give you least, if were financial are able to security for set aside the rest of money for your life and your let you share retirement your legacy that is totally with the next separate from generation. the farm Aside from operation, diversifying you would your assets, have financial creating security for wealth yourself.
If everything estate and is tied up in possibly fixed assets increase the when a major amount of change money you happens, leave behind. even the best Talking about managed life insurance farms can can be stumble. difficult and The proceeds there are of a life some upfront insurance costs policy can be associated used to help with finding cover the the right taxes payable insurance resulting solution for from the you but these years of costs are growth of nothing your compared to business. A the
People change, situations and 3. Keep everyone informed circumstances change � be 4. Expect the unexpected prepared 5. Time very seldom solves No one likes surprises when it problems � Deal with the comes to estate planning and issues now family wills Secrets can cause family problems and destroy trust between family members so �� .. 1. Start talking now 2. Put things in writing
Imagine a future that - Sufficient funding for includes: tax and fair wealth distribution - A harmonious ownership group - Good communication - Clear , agreed-upon - Good decision-making criteria for ownership - The ability to exit the - An ownership plan the business family has contributed to and understands - The perception of fairness amongst the family - A plan to minimize tax
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