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Ag lender’s role in agriculture business succession: Part 2

Ag lender’s role in agriculture business succession: Part 2

In my road warrior travels, questions frequently arise concerning estate and transition planning. Producers often want a quick answer, such as advice on whether their business should be organized as a corporation or LLC, etc. To their disappointment, I will state that this challenge is a process, not an event. Sometimes before you seek legal counsel or hire an accountant, your best resource in preparing for business transition may be your agricultural lender.

In the last column we discussed how a lender can play a role in this process. For many of you, your lender can act as a comfort blanket because of the long-term relationship established thru the years. Another benefit is that your lender requires you to submit financial statements, which are critical for the foundation of transition planning. They may also have some insight on the financial and management success of your business. Let’s continue that discussion.


Often, an issue that trips up the transition management planning process is dealing with different personalities involved. Lenders frequently know the hot buttons in personalities and trigger points that create landmines in communications and family business relationships. The lender can also act as a third-party facilitator to keep the process moving and keep various family, partner and stakeholder egos out of the personal “swamp issues,” which I have personally observed often revert people back to petty jealousy from their childhoods. This discussion can often build upon stakeholders’ commonalities and assist in negotiating out differences. These differences are analogous to quicksand that can quickly zap business and family energy and financial resources if business stakeholders grind over and over on the “swamp issues.”


The lender can play a role as a quarterback, keeping the ball rolling by directing stakeholders, owners and managers, as well as diverting the business toward qualified professionals to develop a customized solution for each individual business.

You may be thinking, why would a lender assist in transition planning? Side conversations with these financial professionals at meetings and conferences find that their biggest reward is observing a business successfully evolving to the next generation of owners. This brings in new business opportunities for them from the financial side. On the other side, producers should keep in mind that this process takes time, which builds loyalty and trust amongst the parties involved. Trust is frequently much more important than seeking the lowest interest rate all the time.


A prominent trend I have observed from lender conferences and schools is a transition that is taking place with new and young ag lenders entering the workforce as more experienced lenders retire. This is both challenging and exciting as transition management issues are not only for producers, but we are seeing it with the lenders as well.

TAGS: Management
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