If it turns out that your offspring are not interested in sunning your farm or business into the next generation you have two options.
Option number one is for you to keep working forever (ok you may be able to find someone to rent it) until you simply wear out and die. At that point your widow (wives outlive husbands by an average of 10 years on the farm) can put it up for sale.
Option number two is for you to negotiate the sale of your place in advance, getting the best price and terms possible, so that your family's financial future position is secured and known well in advance.
For most of those who choose Option #1 getting the maximum value for their lifetime of hard work is a pipe dream. Potential buyers will offer less than the farm/business is worth for a couple of very logical - to them, reasons. You will not be around to reason with them so what makes sense to the potential buyers is much more important that what your family may think is true.
Typically farm insurance agents have seen these unhappy scenarios play out again and again where people they know thought they were somehow special and the rules of nature and finance would not apply to them. People who learned, or at least their families learned, the truth the hard way.
If farming was easy, anybody could do it. Good years and bad years come and go with some farmers doing better than others during both the up years and the down. Your efforts and your knowledge are probably responsible for some of the profits and success you've had over the years.
If you're no longer around, everything else being equal, your farm's profits will shrink and the farm's earning power will decline. In fact the farm, without you, may no longer exist as a going concern that produces income above what you could rent the land to a neighbor for.
If you have special knowledge and experience that produces fatter cattle, more milk per head, greater yields, etc. buyers will want to discount the price to or below the local rental value since you will not be available to provide your special insights to help them get the most from their investment.
Another problem is that the purchase price will be arrived at through negotiation, without you, allowing potential buyers to offer less than the asking price. The final price will be the result of a compromise reflecting the bargaining strength of both parties. Who do you think will have a stronger position, the potential buyer or your family, if you're not around?
In most situations the potential buyers will have more leverage and so they will have more control of the final price and the terms. If your family also needs cash and the potential buyers know it, there may be a tremendous loss of total price in exchange for the cash your family needs desperately. Your family will inevitably receive less than the full value of what you've built.
Farm insurance agents know that there is a way, Option #2, where you can make sure your farm business is sold for what it's really worth. That's by doing your negotiations NOW while you're in your best bargaining position.
You can seek out, maybe with your business accountant's and lawyer's help, interested purchasers and negotiate an agreement that will give your family the most possible dollars for your years of hard work. Naturally the best way to accomplish this is with a written contract that establishes the terms of sale - today, in advance of the day it will be needed.
Such a contract is called a Buy & Sell Agreement. It formalizes the procedure for transferring your interest over to new owners. It provides a smooth transition of ownership and minimizes lost business value.
If you are in business with one or more people a Buy & Sell Agreement is an absolute necessity. If one of you leaves the business it's likely the others will want to continue. Isn't that your situation? Wouldn't you want to continue the farm if your partner left?
In fact, you and your partners probably have the same concerns. You both want full value for your interest if you leave and you want to take over the farm if they leave the business first.
If you are a sole owner you can enter into a Buy & Sell Agreement with a key employee, an outsider such the son of a neighboring farm owner, or even a competitor. If you are selling the buyer should not matter as long as the price is one you agree upon as fair, the terms fit your needs, and the buyer has the resources to make the payments.
So, where should you go to learn more about the ins and outs of Buy & Sell Agreements and how they can help you achieve your objectives? Farm insurance agents have access to the tools and the terms of agreements used successfully by other farm owners.
Farm insurance agents can also arrange for the financing of the agreement so that the buyer gets a huge discount, payments are only required while you are around to make sure they are being made, and farm insurance agents are the only people who will attend your or your partners funerals with a cashier's check in their pocket for your and/or your family.
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