| | Chapter 1 | Chapter 2 | Chapter 3 | Chapter 4 | Chapter 5 | Chapter 6 | Chapter 7 | Chapter 8 | Chapter 9 | Appendix
Welcome
Transition planning is the process of planning to transfer the ownership (capital), management, and operations (labour) of an agribusiness to a child(ren), relative or other successor. Transition planning is not a single event and cannot be completed in a handful of meetings with advisors. Rather, it is a process that should be thought of as business continuity planning. Expect to invest six months to a year or more in planning for transition.
Priority one: strategic direction
For transition to be successful, a business must be healthy heading into transition planning, remain healthy throughout the planning process, and emerge at the end of transition as strong as or stronger than when the process started. In order to achieve healthy and effective transition, a transition plan needs to complement the strategic direction of your business. Often, families working on their transition plans overlook this critical piece. Therefore, before you get started, all participants need to have a very clear understanding of:
- What are the agribusiness’s goals, values and vision?
- What does each participant in the agribusiness want?
- Where might the agribusiness be in the future (strengths, challenges, opportunities, risks)?
- Where might the family be in the future (strengths, challenges, opportunities, risks, priorities)?
Setting and then frequently referring to a strategic direction will help keep ongoing farm management in sync with the transition, and increases the likelihood that the agribusiness will remain viable and profitable through the transition. Remember, if the planning process does not set the stage for business and family success, the transition plan will fail.
About this guide
If you are thinking about transition planning, this Guide is for you Whether you are a farm family-agribusiness owner intending to work through transition independently, or a business advisor / consultant hired to assist in the development of a transition plan, this Guide will help you through the necessary steps to successful transition.
This Guide breaks transition planning into three phases: readiness assessment, plan development, and plan implementation.
In order to develop a plan, you will start with an initial planning meeting with family members and others involved in the transition planning process. Then, you will select from the five outlined in this Guide a planning approaches that best suits your business and the priorities and needs of everyone involved in the transition. Once you have identified an approach, you will work step-by-step through a series of topics to create a comprehensive transition plan.
As you work through these topics, your group will identify issues that require follow-up. Staying on top of these tasks and ensuring they get completed is key to a successful transition. When your group identifies issues that require follow-up, it is recommended that you add the task to a master list of follow-up items, and the write a specific action plan for the item. The action plan should:
- clearly identify who should follow-up on the issue and by when;
- list specific steps required to adequately tackle the challenge, including a time line to each of these steps;
- list any specific materials or resources that will be needed to complete the follow-up;
- list how often the action items should be monitored, and who will be responsible for monitoring;
- identify how your group will be able to assess whether progress is being made.
The appendix located at the end of this Guide contains removable forms and worksheets designed to help record information and guide you through each topic.
TABLE OF CONTENTS
Phase 1: Background and Getting Started
Chapter 1: Understanding the Road to Transition Planning Success
Chapter 2: Transition Overview
- How are Transition Planning and Estate Planning Different?
- What does a Transition Plan look like?
- What is the Transition Planning Process?
- What are the Approaches to Transition Planning?
Chapter 3: Initial Planning
- Getting Started
- Initial Meeting Agenda
Phase 2 – Readiness Assessment
Chapter 4: Priorities
- Topic 1: Goals
- Topic 2 and 3: Values – Individual and Family/Group
- Topic 4: Family First/Business First
- Topic 5: Retiring Generation
- Topic 6: Succeeding Generation
- Chapter 4 Recap Checklist
Chapter 5: Assessment
- Topic 7: Financial Performance
- Topic 8: Management Assessment
- Topic 9: Personalities
- Topic 10: Historical Business Development
- Topic 11: Readiness Assessment Review Meeting
- Topic 12: Decision Time
- Topic 13: Statement of Intent
- Chapter 5 Recap Checklist
Phase 3 – Plan Development
Chapter 6: Foundation and Strategic Direction
- Topic 14: Foundation
- Part A: Challenges in Transition Planning
- Part B: Guiding Principles
- Part C: Conflict Management
- Part D: Resource Team Identification
- Part E: Advisor Information Report
- Topic 15: Strategic Direction
- Part A: Vision
- Part B: Situational Analysis
- Part C: Risk Assessment
- Part D: Critical Issues
- Part E: Critical Issue Action Plans
- Part F: Financial Targets
- Topic 16: Strategic Direction Review Meeting
- Chapter 6 Recap Checklist
Chapter 7: Structure
- Topic 17: Transition Options
- Part A: Successor Assessment
- Part B: Ownership Options
- Part C: Business Structure
- I: Transfer Methods
- Ii: Structuring the Transfer
- Iii: Business Structures
- Part D: Financial Performance: Transition Scenario
- Topic 18: Preliminary Advisor Review
- Topic 19: Estate Plan Elements
- Part A: Estate Distribution
- Part B: Wills, Power of Attorney, Executor
- Part C: Insurance
- Topic 20: Human Resources
- Part A: Management Structure
- Part B: Management Activities
- Part C: Job Descriptions
- Part D: Compensation
- Part E: Roles, Responsibilities and Authority
- Part F: Training and Skill Development
- Topic 21: Agreements
- Part A: Unanimous Shareholder Agreement/Partnership Agreement
- Part B: Business Agreements
- Topic 22: Deal Breaker Issues
- Chapter 7 Recap Checklist
Chapter 8: Review
- Topic 23: Transition Plan Review
- Topic 24: Accountant Review
- Topic 25: Lawyer Review
- Topic 26: Final Plan Adjustments
- Topic 27: Accountant/Lawyer Sign-off
- Topic 28: Final Review Meeting
- Chapter 8 Recap Checklist
Phase 4 – Plan Implementation
Chapter 9: Turning Your Plan into Reality
Appendix
Resource References and Contact Information
- The Executive Program for Agricultural Producers (TEPAP)
www.tepap.tamu.edu
- Canadian Total Excellence in Agricultural Training (CTEAM)
www.agrifoodtraining.com
- Farm Credit Canada
www.fcc-fac.ca
- Farm Management Canada
www.fmc-gac.com
- Government of Canada
www.agritalent.ca
- Alberta Agriculture and Forestry
www.agric.gov.ab.ca
- Manitoba Agriculture
www.manitoba.ca/agriculture
- Saskatchewan Ministry of Agriculture
www.agriculture.gov.sk.ca
- Online DISC Profile
www.onlinediscprofile.com
- Centrec Consulting Group
www.centrec.com
- Family Business Management Services llC
www.familybusinessmgt.com
- Legacy by Design, llC
www.legacy-by-design.com
- Backswath Management Inc.
www.backswath.com
Acknowledgment
This publication and the format are based on the "Transition Planning Guide for Agribusiness", published by Manitoba Agriculture. Adapted with permission from the Manitoba Government.
Edited by Baerg Communications, Oliver, British Columbia.
Prepared by
Alberta Agriculture and Forestry
The development of this publication was supported in part by Growing Forward 2, a federal-provincial-territorial initiative.
More information, contact:
Alberta Ag-Info Centre
Call toll free: 310-FARM (3276)
Website: www.agriculture.alberta.ca
Source: Agdex 812-22. November 2016. |
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