Fear of Conflict can Spell Disaster


The first and most important step, actually a pre-step before even considering succession, is to open the lines of communication between the generations. Once everyone is talking they will start to think about the future of the family farm

Succession planning cannot be approached as a one-time event. Instead, it is a process that should begin long before the owners plan to exit the business.

When initiating a conversation about the transition of the business it is important to understand the needs and expectations of all stakeholders. 

Current owners/managers have often devoted their lives to their business and family farm. When people are this involved it is also difficult to envision a meaningful existence outside of the business and their current role.

The future owners/managers will also want to ensure that their future is secure and not burdened by too much debt. Other members of the family not involved in the business will want to know that the transition plan values their position appropriately and the whole family will want a smooth transition without creating tensions and acrimony.

Keeping the legacy

Many rural family business owners perceive themselves as the custodians of a family legacy and if there has been a tradition of keeping the business in the family, the current owners often have a desire to continue this tradition into the next generation and this is a good starting point to begin the process of succession planning.

However, some tough decisions may need to be made as to whether parties may wish to hand over property, business or assets and whether the other parties want to accept ownership of such.

A family meeting may help identify the potential for any overt or hidden conflict or difficulties amongst family members that may inhibit the planning process.

Consideration may need to be given as to the financial capability of the new owners to meet ongoing costs and also provide sufficient funds to enable the current owners to have a satisfactory retirement. If a total transition of ownership and management to the next generation is not an option at the current time then other alternatives may have to be considered such as:

  • A gradual change in ownership over time based upon regular and manageable transition payments.
  • A gradual handover of management. For example, the future owners are responsible for a small herd and
  • manage the physical requirements when to muster/sell) as well as the business requirements such as paying bills. This may be a safer option if they have little past experience.
  • Have a partial release of ownership or management.
  • Sell the property and divide up the funds.
  • Lease the property to the next
  • generation or an outside party.
  • Leave no stone unturned

If the current owner is not prepared to make a graceful exit, planning for and implementing the transition can be a frustrating and disappointing process. For many current owners the idea of continuing the legacy is part of their dream.

They can look back with pride and satisfaction at the results of their willingness to take risks, to work hard and to self-sacrifice.

It has probably been an exciting and challenging journey, however, succession and business transition is a matter of when and how best rather than if. Even when the founder is no longer present in the business their influence will live on. The best way to start the conversation may be to conduct a formal family meeting to understand the attitudes of the various participants to a business transition and succession process.

The objectives of the family meeting are to achieve the following:

  • A commitment from all family members to the process and to the goal of achieving a positive outcome.
  • Gain and share a better understanding of the family legacy and the needs and expectations of all the participants.
  • Identify any potential impediments to a successful outcome.
  • Ensure that the process is undertaken in a way that maintains family harmony and business prosperity.
  • Gain an understanding of the retirement lifestyle goals and aspirations of the current owners.

Some of the questions/discussions that might also be considered include:

  • What would be the ideal outcome from the succession planning process for the farm and the business?
    What about the outcome for the family?
  • What would you like to have happened to make you feel the process was successful?
    What about the family?
  • What are the key issues that would need to be resolved to reach an outcome that would satisfy everyone?
  • What would be the outcome if this process wasn’t successful?
    For the business?
    For the Family?

List the three top issues that you think could put at risk a good outcome

Get professional help

It is important that any issues are clearly identified and a resolution and commitment is achieved. A family meeting may help identify the potential for any overt or hidden conflict or difficulties amongst family members that may inhibit the planning process.

It should also help all participants understand in an open and honest manner, the feelings and attitudes of the various stakeholders.

The participants need to discuss their thoughts and feelings honestly and openly without fear or favour to gain maximum benefit.

Many families are reluctant to start this first conversion and find the subject of succession too sensitive and confronting.

You may wish to use the services of a professional facilitator who can provide independent advice. 

The facilitator will then be able to use the information gained at this initial meeting to better plan a successful succession outcome.

Next Rural have put together a simple yet comprehensive guide to business transition and succession planning. To obtain a copy of this FREE guide, with no obligations, email Next Rural at info@nextrural.com.au or call 1800 708 495.