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A team approach to farm succession

Getting their advisers to meet and work together as a team is helping drive the Tilstras’ succession planning

farmers beside a tractor

When Ted Tilstra imagined his retirement, he knew that he wanted it to continue to include having a coffee around the kitchen table with his brother and nephews.

Tilstra Bros. have been running their parents’ dairy farm in Dunnville, Ont., for nearly 25 years. Together Don and Ted are milking 100 purebred Holstein cattle and have often been scoring among their county’s top 10 dairy herd managers. With their wives contributing by working out and their kids amicably involved in the farm’s routine, it’s a picture of family harmony now and into the future.

But Don and Ted have been around long enough to be wary anyway.

“You see so many farms and farm families trying to make the transition, where the wheels fell out of the family affair trying to make the transition, and where they won’t talk to each other anymore,” Ted says.

So when Len Davies of Davies Legacy Planning Group stood up two years ago to talk about multidisciplinary advising at a workshop in Vineland, Ont., the Tilstra family was listening. “If you’re in a farming operation, you use your accountant, feed nutritionist, vet service, and agronomist,” Davies reasoned. “You’ve got to use people who look at your business with a different perspective than you.”

For the Tilstras, it was a process at first to hire a succession planner, but in addition to hearing from Davies in Vineland, two of Don’s sons had also heard him speak while they were attending Ridgetown College. Then there was Ted and Karen’s own son, who was starting to show a keen interest in farming himself. “Over time, we’ve watched the kids, where their interests are, how they’re educating themselves, integrating themselves into the farming community, and they want to farm,” Karen says. “So it’s become important to us that we get them started reasonably young, when they have lots of energy to work hard, because it’s a long haul.”

The whole Tilstra family agreed to meet with Davies in the early spring of 2014 to start talking about how Don, Jeanette, and their three boys might possibly farm with Ted and his son, and if they should be shopping for neighbouring dairy barns, or building another facility completely and splitting the milk quota the farm already had.

people standing outside a red barn
Critical to the success of the advisory team is that it kept final control squarely in the hands of Ted and Karen (l) and Don and Jeanette. photo: Dew Imagery

“I think you need to feel connected to the person you choose, and we felt connected to Len,” Karen says, “and we liked the idea of multi-involvement from everybody.” It wasn’t long before the whole family was sitting down at a table, working out the early stages of a big plan, with Davies, their lender Derek Emond, and accountant, Connor Keuning, all weighing in as they went along.

Making it work

While graduating in 2013 from the Sauder School of Business at the University of British Columbia, Davies was introduced to the concept of multidisciplinary advising, which advocates having all of a family business’s key professional advisers work together in planning activities.

The concept wasn’t developed for agriculture, but Davies, a member of the Canadian Association of Farm Advisors, immediately sensed a potential fit. Having worked in the farm community for over 45 years, he’s seen how complex the business has become, and he believes team advising produces the best possible results.

“You’ve got the synergies of the team working for you,” Davies says. “Individually, advisers may not think of everything, but as a team, one says something that gets another one thinking.”

Davies says his role is to “quarterback” the efforts of the team and ensure everyone assembled plays well together.

“You can have a very smart accountant who is going to sit there and say nothing, but that’s no good to you on a team,” Davies says as an example. So he uses his best discretion to either work with the advisers his farm clients have a history with already, or they call in additional team players who will strengthen any team weaknesses.

When assembling these teams, Davies says there really are a number of qualities to look for. “You’ve got to be an out-of-the-box thinker,” he says. “You’ve got to be able to look ahead at where the industry’s going, to be a kind of a futurist. You’ve got to express yourself. And you’ve got to leave your ego at the door.”

Fortunately, by all accounts, ego isn’t an issue with the team working for the Tilstra family. Keuning tells me that he’s had the opportunity to work with Davies before and still hasn’t experienced a case where one adviser decided to be a hero. In the Tilstra case, he welcomes the opportunity to work closely with their lender rather than shy away from someone who may question his financial statements. Instead, he finds it feeds his ideas.

“You just have more brain power working for you, coming from different angles,” Keuning says.

For instance, if Keuning asks a question like: “What is the maximum loan this operation could get on quota?” Emond, as a lender from Farm Credit Canada, can immediately answer them because he’s on top of that discipline.

Adds Keuning: “Bankers also have other analytical skills that are constantly being updated and they know about policies that change all the time, so I think it’s good to have an individual like that on board.”

As long as there’s mutual respect between the professionals at the table, Keuning believes the approach is very effective.

Similarly Emond, who has been the Tilstras’ lender for 18 years now and is very familiar with Keuning’s work, appreciates sharing the table with the farm accountant. “I find now, because so many families are incorporating or doing different structures or implementing new creative ideas, I don’t like to make a move without talking to the accountant first,” he says.

Sometimes logistics prevent face-to-face meetings at the kitchen table, but technology makes it easy to copy in the whole team. The beauty of all this transparency, Emond tells me, is that the clients always know what’s going on and there are no surprises. Davies and Keuning know exactly what he’s doing, Emond adds, “so if they see something wrong, I’m hoping they poke a hole in it and say, ‘Derek, you can’t do that,’ or, ‘Derek, this doesn’t make sense from our end.’”

But when everyone does get together at the table, they all come prepared. “I come in with the cash flows, Len’s doing the family dynamics side of things, and Connor’s looking at this from a tax perspective,” Emond says. “We each have our own expertise and we respect that.”

The farmer in charge

Davies says this sort of role definition is critical to making the team atmosphere work. His job is also to maintain sight of the fact that at the end of the day, the Tilstras are the ones in charge here. “I make it quite clear that the advisers throw the stuff out, but you as the manager get to choose what you want to do.”

It’s the job of the advisers to look for any holes in the plan, as well as to suggest better ways to achieve the farm family’s objectives, and also to explain overall how the plan could be implemented.

For the Tilstras, it was important to outline the goal, making it clear that they wanted to be able to start the next generation off in a way that would keep everyone still happy to see one another at Christmas. That in turn soon led to a plan for Ted to cash out some of his shares in the dairy business so he and Karen could build a house and chicken barn to get their son started in broilers.

The suggestion that the brothers’ current operation could afford that much additional debt, without cash-strapping the existing business, became a real eureka moment for all of the family, and came directly out of a meeting with the advisory team. Emond says it was a contribution he was really proud to make.

“There’s nothing personal in this for me other than seeing these people I really like succeed,” Emond says. “They recognize each other’s strengths and weaknesses, they each have their own specialty on the farm, and they’re very courteous to one another, whether it comes down to allowing one another to take vacation time, or do their own stuff separately, but they really respect each other.”

Keuning says he has observed much the same, and although this succession isn’t complete, he’s very optimistic about it. He looks forward to one of the final tests to the plan they’re generating, which is when the Tilstras present everything for legal preparation.

“I’ve not been in a case where there was a lawyer in place early on, but I find they work as a sober second thought,” Keuning says. “They come in at the end and put it together, and do a lot of double-checking on things.” Because their area of expertise is so different from the other advisers on the team, he expects any lawyer who’s on the ball will have some more good suggestions.

Ted assures me the Tilstra succession plan is far from complete, so their story is far from over. They are, after all, only a handful of months into what Davies tells me is a multi-year process with an incoming generation that’s still in school or only recently graduated.

But this is largely contributing to the family’s conviction that Davies’ multidisciplinary approach was the best decision they could have made.

“Len knows how to pull what he wants from the kids,” Ted chuckles. “You don’t have the knowledge to ask the questions the way he would to get the answers about their expectations and where they want to be.”

Karen is quick to agree. “I’ve been in business all my life, and Len just had that next level of understanding about business and farming,” she says.

When they started, they had no idea that the process would be leading them away from the dairy business, would see them potentially move off of the family farm, and what’s more, be comfortable with that prospect. They couldn’t have asked for more though, especially looking forward to the day Ted sits down to have a laugh about it all, over coffee, with his brother and farming nephews.

This article was originally published as “Team work” in the February 17, 2015 issue of Country Guide

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Amy Petherick

Amy Petherick is a Contributing Editor for Country Guide.

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