Business successors are having a hard time

Business takeovers are becoming increasingly complex, as the difference between the takeover value and the market value of farms continues to increase. About 95 percent of acquisitions do not go to the business successor for appraisal value. Because the value of the companies increases, the children more often demand their share.

According to Camiel Verhagen, business advisor at Accon avm, only 5 percent of the farms can be taken over at the appraised value. 'Often half of the appraisal value of the property is not even met.'

Complexity
The agricultural business transfer is becoming increasingly complex. Parents are willing to transfer the company to the intended successor within the family. However, the donation to that successor has to be higher and higher if the business successor is to be able to secure the financing. Peter Pals  van Farmers Funding: 'Continuing the family business is a form of stewardship. If the other children in the family don't see it that way, it will be very difficult to take over.'

Companies become more valuable
Children are becoming more empowered and aware of the increasing value of the family business. Verhagen: 'Farming companies are becoming more valuable. This is especially true for land-based businesses. In arable farming, no business can be taken over at the appraised value. The price of land is not proportional to the yields. With the introduction of phosphate rights, it will only become more difficult and more expensive for dairy farmers.'

Landlord value still too high
Land that is brought into partnership is usually included in the partnership deed at lessor value. The lessor's value is approximately half of the free value. 'Even then, the company value is in many cases still too high for successors to take over the company,' says Verhagen. 

Family business is increasing in value
Verhagen sees many parents struggling with the high donation (to the successors) that is needed to get the financing done. The other children in the family also increasingly demand their share, precisely because the family business is worth so much. 'It is often impossible to give all children an equal gift. The parents also want to keep a pension after the company takeover. This makes company takeovers very complex and lengthy processes.'

New acquisition structures
New takeover structures, more often than before, offer a solution to get the financing of a company takeover in order. Pals: 'This often involves separating ownership and operation of a company. Successors are often still hesitant about this. They find the construction too complicated then.' Camiel Verhagen mentions 2 examples that can offer a solution:

1. family foundation: a foundation is established where part of the land is brought in. 
2. BV structure: other children in the family receive shares in the newly transferred farm. 

Verhagen also advises to enter into discussions with each other about the takeover at an early stage and to clarify the expectations of all those involved. He also recommends regularly evaluating the partnership deed and updating it if necessary. 

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