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Succession

B

Big Swede

Well-known member
Joined
Jan 21, 2008
Messages
1,179
Location
South Dakota
I read an article in a farm magazine the other day that referred to the success rate of passing on the operation to the next generation. The failure rate from 1st generation to the 2nd generation is 70%, from 2nd to 3rd is 90% and from 3rd to 4th is 96%. No wonder people in ag only make up a small percentage of the population.

I'll bet most on this board have beaten the odds more than not. I'm the 3rd generation on this ranch and my son wants to go to South Dakota State and get a degree in agriculture and come back to become the 4th. :D

Anyone want to share their stories?
 
Im in the process right now in taking over more land from my parents. Started 10 years ago with buying 50 head of cows just to get my feet wet. As the years went on I tried to buy some pasture land around just to help get my feet on the ground and it was getting harder and pricer to find. Just bought 800 acres that will help to get ahead and then work more into taking over my parents place.

The one thing that I think guys my age and younger is you dont always need the shinnest or best stuff out there. Alot of guys get by with older equipment, pickups etc. Its hard to make any money if your always spending on new things. On the farming side of things I know alot of guys my age get started and then go out and buy a new JD tractor that's over $200,000 and try to make things work.
 
I am the fifth generation on our homestead and since the passing of my grandfather almost a year ago I will most likely be the last. You see my dad and uncle that are here now have five other brothers that all they can see is dallar signs in ground we run and because one of them had enough guts to half my grandfather sign everything over to them on his death bed we are now in a fight for our lively hood with them. I don't know if we can servive all the legal fees that we looking at facing just to keep going. If I could say one thing to you oldtimers on here it is get a will and get everything done so your kids know what is theirs and what is not so they don't have to go though the b.s. that we are going though. Because people change when it comes to money and if you want to divide you family real quick just leave everything undone and it will happen.
 
I am the 1st generation. I was a 7th grader and watched my grandfather lose everything in the 80's. I worked for a neighbor for many years, then bought an irrigated 1/4 to get going on my ow, now I have added an additional 800 acres in rented land, and looking to lease more this spring... money is super tight, and there is little room for error, but I will put something together to hand down to my son.
 
I'm the 5th generation of my family to ranch here in the Sandhills. Sadly, we don't own either my GG grandparents homestead or my great grandparents Kincaid homestead. Hopefully at least one of my sons will be the 6th generation.
 
Ancestors settled here on the homeplace before the War of Northern Aggression. I would be the 6th generation, youngins are the 7th generation to be enslaved by bovine husbandry. Good to see lots of other old timey, stubborn folks on board.
 
I am first generation on this place. The family I bought most of it from were on it just short of 100 years. I watched my dad try and deal with high interests rates in the 80's before calling it quits. He was second generation. I have involvement with other businesses. It takes some long term thinking and planning to move from one generation to the next. It is especially challenging when one or more children wants to be involved in the business and the other one(s) do not. Key Man Insurance policies are sometimes a way to fund the transition. Family Trusts are another way to protect the ranch and its division from the risks of children and their spouse getting divorced. I think there are more options under a corporate structure. Communication is key.
 
tenbach79 said:
Im in the process right now in taking over more land from my parents. Started 10 years ago with buying 50 head of cows just to get my feet wet. As the years went on I tried to buy some pasture land around just to help get my feet on the ground and it was getting harder and pricer to find. Just bought 800 acres that will help to get ahead and then work more into taking over my parents place.

The one thing that I think guys my age and younger is you dont always need the shinnest or best stuff out there. Alot of guys get by with older equipment, pickups etc. Its hard to make any money if your always spending on new things. On the farming side of things I know alot of guys my age get started and then go out and buy a new JD tractor that's over $200,000 and try to make things work.
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I agree college and I didn't get along so before I finished the first semester I bought a tractor (4430) and a baler. The newest tractor I own is a 4640 and they do just as good as a brand new one. Plus I can't fix a computer but I can fix most of the stuff on my old 30 series tractors.
 
When I graduated from high school I was like some kids I wanted to get the heck out of dodge and don't do the country life. I went to a airline mechanic school and was going to go and make the big bucks. But those dollars where going to be made in Atlanta or some other big city. We set down as a family and kind of put a plan out that would work for everyone and went from there. Best thing that I ever did, now my kids can grow up with the same life style that I did. Might not have the Million dollar house but I will leave them with a Million dollars worth of land :D Or debt :roll:
 
We've been here 94 years but I'm only the 3rd-the family farm in Scotland was in the family for just over 800 years till the last one died. Megan has her own cows and some land-the other kids have their own cows so we'll see how it all goes I guess.
 
I am 5th generation on this operation and the kids are 6th. We are just finishing up our succession plan/process and have learned a lot...
1. succession is not an activity, it is a lifetime continual activity
2. the most important thing is for people to explain what they need/want and expect. Succession is about explaining to accountants and lawyers what you want to do, rather than just saying "what should we do?". This saves a lot of time and money, and turns a cost into a resource
3. the hardest part may be for people to accept that they are pretty good teachers and their kids might be reasonable students.
4. get outside help with accounting, legal and communication issues
5. enjoy the process
6. I am VERY VERY GIFTED in the fact that I grew up in a family that allowed and expected us to take responsibility and enjoyed handing responsibility over.
7. Lawyers are concerned with liability and protecting people's property through legal arrangements. The best way to protect each others interests is actually with communication and fewer legal arrangements. In other words, nothing is more likely to cause a divorce or fight over assets than excluding a partner from the decision making process because of the fear they might get divorced and take part of the operation.
8. Did I mention I am lucky since our family understands many of these facts through hard experience learned in previous successions.
9. a vision statement for your operation that everyone believes in makes life 100% easier.
10. Family is family and business is business, but it is unlikely that you ever got in a fist fight with your partner in business when you were 10 years old. Tread carefully and respectfully.
11. Fair and equal are not the same thing.
12. the old guy knows a thing or two, and the young guy might
13. PATIENCE!!!

We are the first generation that is operating in a position where the production from the assets cannot pay market price for the assets, since the valuation is not based on agricultural production in our area. I suspect that even in farms/ranches that have not changed size over the years, the value of the assets is substantially/exponentially greater than ever before.
 
3rd generation on the 95 year old homestead. Great grandfather homesteaded in Minnesota and grandpa homesteaded here in Montana. Not sure whether my kids will come back or not, they are busy getting educated. Hope either them or nieces or nephews will give it a try. Not without first getting a job off the place (required)
 
Hey Northern Rancher, 800 years is pretty impressive. By the way one of my favorite movies is Braveheart, did your ancestors hand down any stories? Not even sure what the time frame was there in their fight for independence.

I think I just highjacked my own thread. Oh well. Some really great stories and advice so far.
 
Well I'm the 1st generation on my deal. Our families have been farming for 100's of years but with all large families there's not enough to go around. My Dad got M.S. when I was 12 back in the early 80's when interest went to 24% we ended up living in town and I worked for a ranch when I was 16 got the itch and a little help from him. My Dad gave me 16 acres as a wedding gift in 88 and I've built a shop,barn,house etc etc. We rent most of our land but are buying some here and there.I'll never have large wide open spaces that I own but I do have alot of nice rented ground and to tell the truth were just useing the land for the short time were here.

I'm in the cow business not the land business we can rent ground here cheaper per year then the interest on the value alot of it the rent barely covers the taxes.
 
I'm the 3rd generation on this ranch. My grandfather homesteaded here in the early 1900's. Grandma and he moved here from Iowa permanently in 1925 when Dad was a little boy. His brother was just a baby and two more brothers were born here.

There is no 4th generation so in my case the article is likely quite accurate. :roll:
 
John SD said:
I'm the 3rd generation on this ranch. My grandfather homesteaded here in the early 1900's. Grandma and he moved here from Iowa permanently in 1925 when Dad was a little boy. His brother was just a baby and two more brothers were born here.

There is no 4th generation so in my case the article is likely quite accurate. :roll:
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Heck, John, you are not over the hill yet. Never say never. :wink:
 
I'm afraid that succession for ours probably won't be an issue. Due to the cost of land, we lease our ground and unless something unexpected happens, I don't foresee us buying any. Around here, land doesn't get affordable for a cattle operation until the prices get up past a couple of million. Less than that and all you can buy is just a big ranchette. We've actually thought about moving back south when we lose our lease here. Where I grew up lease ground is about $50 cheaper per calf each year.

The Native's daughter lives in Denver and is building her life and has no interest in cows or anything to do with them. My daughter is here, but we're not sure which way she will go yet. Both girls are more interested in the big city. We've got some nephews that would be more than happy to step in when and if the oppurtunity should arise.

As it is, it will be a few years, and some things will have to happen before we can begin to think about succession. If something were to happen to us now, the cattle would just be sold.I keep hoping when the girls get ready they will marry someone with an interest and want to keep it going.
 
Remember folks................ There are plumbers who's kids don't want to be a plumber too. It's not just agriculture that struggles to get the next generation to follow the tracks they made. :D

My Grandfather had 4 daughters. When he got sick towards the end of his magnificent life, He and Grandma wanted the ranch to stay in our family. All of my Aunts and thier husbands along with my parents met together and looked at how that might happen. With life circumstances being what they were at the time, My Aunt and her husband were able to buy the cows, permit and ranch. Fast forward to 13 years ago and the same thing happened as my Uncle struggled with his health. His kids werent interested so the word went out to the whole family. My cousin and her husband were able to buy the cows and permits. The private land stayed with my Aunt and her kids after my uncle died. I am able to help with the operation as it now stands. And my wife and I are working hard to establish our own place with leased ground. I am 5th generation and want to give my kids the option to continue this loved and priviledged lifestyle. I have a lot of faith that they will want to do so! :D The next generation has got to see from their parents how special this life is! We can't leave them home all the time and then be suprised when they don't take an interest in what we do! That's not to say any of ya'll have done that with your kids. I hope we all leave this earth with a legacy of people who will miss us and want to continue what we started or kept going ourselves. :wink:
 

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