Successful business succession can take many forms

“The next book I want to write is a book on how to split up a family business or when splitting up is good for everyone.” — Lance Woodbury

Kansas consultant helps farm families find the best path

Lance Woodbury is annoyed when business professionals frame a succession process that doesn’t involve the next generation taking over as failure. Consultants for accounting firms and family businesses too often use language that he views as a “terrible, terrible framing.” Woodbury has seen situations where a family business is passed to the next generation, “but everybody hates everybody, and there’s no relationships… and the business is full of dysfunctions.”

“So you’ve kept the business going, but there is no family relationship anymore… the whole reason you had a family business is no longer…”

Woodbury, a Kansas native and son of a Presbyterian minister, has done mediation and succession consulting with family businesses across the US for almost three decades. He has authored two books on family businesses and writes a weekly e-mail newsletter entitled Faith & Family Business. About a dozen years ago, Woodbury began focusing solely on people who are farming, ranching, or raising livestock in some other capacity.

He spends about 40 percent of his time facilitating peer group meetings with farmers and ranchers in their 30s and 40s. There are a few recurring reasons why farms end up being split up or sold instead of being passed to the next generation, he said. Woodbury often encounters family members who have different goals for the business or “don’t have interest in participating in the business and are not sure how it will be managed.”

Given that the average age of a US farmer is 58, “often I get calls to collaboratively split up the business.” Such callers are less interested in discussing succession than in figuring out how to dissolve family businesses where people in their 50s, 60s, or 70s no longer want to hold an illiquid asset with multiple other shareholders, he said. “The next book I want to write is a book on how to split up a family business or when splitting up is good for everyone,” he said. The book’s goal will be to help take the fear out or give people permission to explore selling or splitting up a family firm, he said.

Woodbury helped one family split up an 80,000-acre operation. That process took four years. That isn’t a long engagement in his line of work. The succession process – he dislikes the word plan in this context – can stretch on for many years. He has some clients that he has worked with, on and off, for decades. Family businesses go wrong when “the senior generation sticks its head in the sand or just says, hey, you guys need to get along.”

Trying to use generational authority to resolve a dispute instead of embracing a conflict management or conflict resolution process doesn’t fix things, he said. “Conflict is just normal, conflict isn’t bad, conflict is a part of our lives. And what matters is how you handle it.” But family business sales aren’t usually the result of conflict in the farm families that Woodbury works with. Worse than conflict is uncertainty, he said. “What really causes trouble is people not knowing.”

“One of my favorite lines I use is: in the absence of a good story, people make one up.” So if parents don’t tell a story about what will happen with the future of a farm business, “the kids are making it up, and oftentimes they’re getting into conflict because of those assumptions.”

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