What are the four critical areas that are key to planning and delivering successful realisation events?
Agribusiness continues to grow as a key contributor to the Australian economy, despite facing a number of unique challenges. With export demand for Australian products still on the rise, agribusinesses will continue to attract interest from offshore capital and high net worth groups1 – meaning continued opportunity for a change of economic ownership. This could be through a trade sale, inbound investment from private equity, management buy-out or a desire to finally implement family succession plans. These are collectively referred to as ‘realisation events’. According to Colliers International analysis, Australian farmland sold in 2018 totalled $3.3 billion in 2018 (for sales above $5 million), fuelled by cheap debt and higher commodity prices.2
Australian Agribusinesses are truly unique from a planning perspective when it comes to a realisation event. Unless conscious planning has already been undertaken, it is quite common for these businesses to be owned by a mix of sole traders and partnerships (often across a number of generations), companies and trusts. An exotic mix of ownership structures is often further complicated by the wide-ranging assets used in the business – including real estate, goodwill, intellectual property, leases, licences and permits, plant, equipment and trading stock.
This agribusiness bulletin explores four critical areas that are consistent across agribusiness realisation events, and are key to planning and delivering a successful realisation event.
Overall, each of these key considerations highlight the importance of becoming familiar with the affairs and business dynamics in the sense of – do you know what assets you have, who owns them, what are the liabilities, to whom are they owed and have you identified and locked in key persons and contracts? Business owners are ultimately responsible for understanding and educating advisers on each of these nuances when preparing for a realisation event. Failing to do so squarely puts at risk the opportunity to realise the full value of the business and family’s legacy.
John Ioannou – Partner, Deloitte Private
Tegan Dawney – Senior Analyst, Deloitte Private
Melissa Davidson – Personal Assistant, Deloitte Private
The Agribusiness Bulletin focuses on national and local industry, as well as cross-industry insights and trends. This includes some of the drivers we expect to shape the future of the industry and potential challenges that may arise. To get more articles like this delivered straight to your inbox, subscribe to the Agribusiness Bulletin.
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