Farm Business Brokerage
Buy and/or Sell Entire Operations
As a business, your farm has developed a unique level of value. That is, people will buy your business.
Other small businesses have been changing hands for years.
Consider this example:
The owners of a local graphic design and print shop have a long list of loyal customers and well trained, reliable employees. Their building is nearly paid off and they figure if they were able to find the right buyer they would finance the sale of the business and retire a little early. They contact a business broker and 6 months later they have sold the business for 4 times annual earnings and are now on the payroll as a consultant until the new owner gets up to speed. They leased the building and got a nice chunk of cash up front.
Why haven't more farms sold this way?
No one has assembled a list of willing buyers. But farmers are more sophisticated now. In fact, we have buyers… and you should consider discussing your needs with someone here.
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Look at today's typical farm profile:
2700 total crop acres, 600 acres owned, 3 full time employees, Average discretionary cash generated per year (5 year average) = $135,000.
This business owner offers the entire operation for sale via private, confidential listing through our Farm Risk Management division and asks $540,000. (This is above and beyond the net worth value calculated on his balance sheet from tangible assets. He doesn’t necessarily have to liquidate any of these assets… that is, it is a separate decision.)
For the buyer, consider the opportunity here. You step into nearly contiguous acres, pickup reliable employees, carry the previous owner’s endorsement and automatically have a chance to prove yourself as the new tenant. Because you too are a sophisticated business manager, you have a strong understanding of the performance metrics of your business and have confidence that you can enhance the new business by $50/acre and ultimately cash flow the purchase.
To make the transition smoother, the seller agrees to take 10% down, and finance the deal over a 10 year term with a balloon payment on the 5th year, (when a bank can secure the buyer’s position.) The buyer also requests performance clauses related to the leases (if a landlord wants out, the sales price is adjusted.)
The buyer offers to lease the seller’s combine, grain bins, land and new tractor which aids in the seller’s tax management. The balance of the seller’s equipment goes to auction.
The seller stays on the payroll for one year to help smooth the transition. The next year he buys a cabin and fishing boat (a big one probably.)
We can help you reach your goals
Whether you are managing 600 or 6,000 acres, buying or selling, we can help you reach your goals. Send an email to Info@AdvancedAgSolutions.com with your contact information and let us know how we can help you grow your business.
We will keep your inquiry completely confidential. When you’re ready, we will introduce you to our professional team and script the best strategy to maximize your value.
Other Farm Risk Management Services:
• Grain Market MAX
• Strategic planning workshops
• Business plan composition and editing
• Capital purchase & expansion plan financial analysis
(NPV, cashflow, etc.)
• Russell Consulting Group Services
Download the FRM: Strategic Planning Information Sheet (pdf)
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