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Kevin's Interview with "Progressive Forage"

Nov 18th 2015, Legacy By Design

An interview with Kevin Spafford
By Editor Lynn Jaynes
Progressive Forage, as "3 Minutes with Kevin Spafford"
November 2015

In 2005, Kevin Spafford founded Legacy by Design, a succession planning firm dedicated to serving the succession planning needs of farmers, ranchers and agribusiness owners. You may recognize Kevin as the architect of the Farm Journal Legacy Project.

Over the last eight years, Spafford has facilitated more than 100 live events benefitting thousands of farm families across the U.S. His goal is to provide usable information, tools and experiences so families can engage in the succession planning process and achieve results.


Q: Lately, I’ve noticed an increasing number of articles devoted to succession planning for farmers and family business owners in various trade publications. Why has interest picked up in this area?

A: SPAFFORD: Honestly, family business owners in general, and farmers specifically, are not good about succession planning. Most prefer to work hard and hope it’ll turn out OK.

As humans, we live in a constant state of denial regarding our own mortality. To make matters worse, no one – not the bank, regulators, legislators, co-ops, etc. – requires a plan before they’ll do business with a farm owner.

However, succession may be the watershed issue facing farm families today; 70 percent of first-generation family-owned farms, ranches and agribusinesses will not transition to a second generation. Of those that do, 90 percent will not go to a third, and of the few remaining after that, 96 percent will not go to a fourth.

On top of that, a recent study by the USDA says, “If a family has not adequately planned for succession, the farm is likely to go out of business, be absorbed by a larger neighbor or be converted to non-farm use.”

All of this comes at a time when land prices are outstripping a farmer ’s ability to grow the operation, and fewer members of the family are involved in the operation.


Q: So what really happens to a farm, ranch or agribusiness that does not have a succession plan in place?

A: SPAFFORD: Succession planning is a unique experience, and the results from a good plan may be the single greatest accomplishment for a family business owner.

On the other hand, the absence of a plan to transition the operation to a well-prepared next generation, as a going concern during the senior owner ’s lifetime, may lead to dissension among family members, financial disaster for all and a loss of family unity.

The loss of a single family in farming can have a devastating effect on all of us: For the industry, we lose capabilities and the “can-do” culture of a generation.

For the community, we lose a local business owner – someone who is plugged into and supportive of a local town or rural community. For the family, it can be a devastating and total loss. Once they lose the land, once it’s gone, they’re never getting it back.


Q: What’s the biggest hang-up for most families? Why might an owner hesitate to plan for succession?

A: SPAFFORD: Equal versus fair is, hands down, the biggest roadblock to planning. Every parent (or owner) wonders how they can balance ownership shares and financial distributions among their active and inactive children.

Parents have an inherent desire to be fair, and for some that means equal. But equal distributions do not account for the work, dedication and commitment of family members who work in the operation.

Equal distributions are contrary to the long-term success of a family enterprise and counter to most people’s sense of fairness. I encourage families to recognize active participants and reward their sweat equity.


Q: Attorneys are often referred to as the practitioner most associated with succession advice; is there a professional ‘designation’ or ‘specialization’ to identify a succession planning adviser?

A: SPAFFORD: Designing and implementing a succession plan requires professional assistance. At a minimum, there’ll be legal work, so an attorney will have to prepare documents.

There are always tax ramifications, so the family’s accountant will be involved crunching numbers and recommending advantageous alternatives. A financial planner will be involved to implement strategies related to capital and finance. And the list goes on, depending on the specifics of a situation.

For best results, one of the professionals on a family’s team should lead the project and facilitate the process. Though any one of these professionals may be capable, not all of them will be equally qualified. I strongly recommend a family hire or appoint a facilitator to act as the team leader or project manager.

When hiring a project manager, remember they will be serving as coach, confidant and expert to multiple generations of your family. Their communication style and leadership must create an environment of inclusion.

Their style should encourage all active family members to get involved and stay interested in reaching a satisfactory outcome.

Facilitators and project leaders should have a proven ability to:

  • Guide a multidisciplinary team of professionals
  • Facilitate family meetings, lead discussions and conduct interviews
  • Delegate responsibilities and follow up as appropriate
  • Coordinate the process, avoiding stalls, roadblocks or wrecks
  • Inform the family regarding all relevant financial and legal developments


Q: When should an owner start the succession planning process?

A: SPAFFORD: Many people wrestle with the “when” and “how” of succession planning. A comprehensive plan is designed to mitigate the risk and minimize the uncertainty of passing the farm to the next generation.

It is a next step in growing a business bigger than self. It is not a form of giving up or walking away – rather, it’s a manner of development and renewal. It provides the current generation the opportunity and the obligation to prepare the next generation for a leadership role.

Owners often hesitate to start the planning process because it seems overwhelming. A person may have these concerns:

  • Will candid discussions cause a rift in my family? 
  • Can I make objective decisions to protect the family, the farm and my own financial security?
  • How will I be able to sort through the confusion and an endless list of choices?
  • Do I have the time to deal with all of this and continue to manage the operation?

The fact is: The process is far less difficult and exponentially more rewarding than anyone may imagine. If a person is still on the fence, they should consider that it takes time to design and implement the right plan. For a succession plan to be effective, it must have time to mature and develop. Succession is about capturing the opportunity, and a comprehensive plan removes doubt and secures the future.

Over the last several years, I’ve written columns, created tools, facilitated case studies and delivered numerous live events, all in an effort to make the process approachable and encourage farmers, ranchers and agribusiness owners to start. A year from now, they’ll be glad they did...


Part I of II for "Progressive Forage" - the second part of Kevin's conversation with Lynn will follow next month.

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