Farm Progress

Legal Matters: Family business histories are powerful tools that can help successors develop a sense of “multigenerational self.”

January 15, 2018

5 Min Read
WHAT ARE YOU PASSING ON? A farm family’s real legacy is founded on transferring quality values to the next generation. Quality personal and business values count most, no matter the farm’s size or the family’s wealth.

By George Twohig

Most farmers consider the successful transfer of their farm to qualified and committed family members as their ultimate success. Their fundamental belief is that: “We take pride in the history, success and future of our family farm and consider it a legacy worth continuing.” Obviously, the farm’s financial success and successful transfer of management and ownership are essential. However, the family’s real legacy is founded on transferring quality values to the next generation. Quality personal and business values count most, no matter the farm’s size or the family’s wealth. The transfer of quality values benefits not only the successors, but also the children who chose careers off the farm. 

The parents’ immediate succession planning is often focused on legal and tax issues. They want to form the right legal entities and an effective estate plan, and consider how equity will be transferred to the successors on an earned basis. As they are busy with immediate farm work and management challenges, they are often not ready to commit substantial time to dealing with the human issues, other than existing conflicts. However, I always stress the need to develop and document their shared values, shared purposes and a common vision for the farm’s future. 

I often recommend the family develop a business history, which can be instrumental in understanding the values the family holds most dear, and that they believe are critical to the success of the farm and their relationship as partners. Unfortunately, the value of the family’s business history is often overlooked. A business history can be a rich source of information that can lead to extraordinary insights and business solutions. In his book “A Passion for Excellence,” Tom Peters says, “Nothing tells more of what a company really cares about than its stories and legends … listening to a company’s stories is the surest route in determining its real priorities and what symbolizes them.”  

Meaningful insight
Each family has many meaningful stories. Most family members know the history of how the farm started, the significant milestones of its success, and tales about when times were tough. However, these stories are most often about facts and less about values and human relationships. Parents often mistakenly assume that all involved understand the farm’s history and have the same view of its legacy. 

Businesses and families are both complex. When business and family are combined, relationships become even more complex, and the stories really start to unfold: the story of how a family member dealt with major challenges and adversities — the deals and investments that renewed the farm and kept it competitive; or the stories of how each generation effectively or ineffectively passed management, leadership and ownership to the next. These stories not only offer lessons about values, courage, sacrifice and commitment, but also how and why decisions were made. 

Family business histories are powerful tools for businesses. A history, including the underlying stories, can reveal the values of earlier generations to the successors and future successors. It can help the successors develop a sense of “multigenerational self.” When faced with a difficult decision, the successors will be more likely to be guided by the family’s core values and call on their expanded sense of self to find the right solution. 

A family business history can help inspire and inform, and be a source of pride for the family. Future generations can more completely understand and appreciate why prior generations considered the farm “a legacy worth continuing.” A history can enhance the successors’ understanding of the legacy which they will inherit, steward and eventually transfer. It can also help off-farm children and their descendants understand why each generation reinvested in the farm and then transferred the farm to successors at a price the farm could afford to pay.  

The earlier generations’ stories are their way of sharing the underlying values that formed the foundation of the family farm. They help younger family members step into the farm business and assume leadership roles with a better understanding of how the farm business truly operates. 

A history can also “set the record straight” and document forever how and why the farm came to be. It is important to understand how each generation dealt with its challenges in renewing and advancing the farm and having its own strategic success. It is also important to learn from each generation’s successes and failures in transferring management, leadership and ownership. Unless recorded, stories and facts get distorted over time, and negative stories can become destructive to relationships. 

A family business history, like a medical history, assesses the farm’s current status and documents past experiences, which may assist in diagnosing problems and developing value-based solutions. The history can provide information that can lead to better insight about the current status of all aspects of the family farm, including family dynamics. 

Today, family members seldom sit around the kitchen table listening to their parents or grandparents tell stories about “the way things used to be,” but they should. Then, as we get older, we wish we had written down or recorded those important stories. Too often those stories and their important messages are lost or forgotten over time. 

Your family business history would be a legacy to your future generations. It would benefit everyone who shared their experiences, helped record and gather the information, or just read the history. Most importantly, the history may provide a broader sense of identity, continuity and values that will help assure a solid foundation for your farm’s future. 

Twohig is a partner in the Chilton, Wis., ag law firm Twohig, Reitbrock, Schneider and Halbach S.C. To contact Twohig, call 920-849-4999. 

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