Change is a fact of life. Farming is a balance of managing change and maintaining heritage. When opportunities present themselves for diversification or to buy another business, what are the legal issues farmers should think about? Gavin Poole, a corporate partner at Stephens Scown LLP discusses the issues.
Areas that frequently need to be dealt with at the outset include:
- Remember your core strengths: Many farming businesses have done well (often over many generations) and have key assets they will wish to preserve. When a new venture presents itself, consider the structure of your business. Should the new venture be part of the existing (successful) business? Should it be set up in an independent fashion? What are the risk implications and opportunities, not just for the new venture but also the impact on the existing business?
- Why do you wish to diversify and who is going to be part of your team? At the early stage, there will be plenty of enthusiasm and ideas. It will be important to harness that energy to the things that stay true to the initial notion and to remain focussed on it. Gathering a good team around you will be important (include some critical friends). Depending on the structure you choose, you would be well advised to have an agreement amongst you to cover off things that may well come up in the future such as differences/departures, setting up in competition and financial objectives.
- Do your homework on legal issues: As well as speaking with others who have trodden a similar path, there is a lot of publicly available information that you can review if you are thinking of acquiring an existing business. Such information will immediately give you an idea of how seriously the legal issues are treated within the business and could indicate the appetite for investment elsewhere in the business. If a company, check its filings at Companies House. The business’s own website should have terms and conditions, privacy and other policies; are these up to date? What is the social media profile – its own promotions as well as its customers? The domain name can also be checked to confirm the ownership of the website. As and when you instruct lawyers, you’ll be much clearer on the areas you wish to have verified, and save some money.
There are plenty of things to review that fall outside the lens of “legals”. It is critical to see through the smoke and mirrors to make sure you’re making a silk purse, not a sow’s ear!
Big events, opportunities to show off and celebrations are something that most of us enjoy whether they range from athletic championships to county shows. But when the gloss has no foundation, a bitter taste can follow.