• Rural Community

    Equity Partnerships are a great way to get into farm ownership and grow your equity.
    A successful equity partnership is brilliant. It's great to be part of a team and share the success with others. Everyone brings something different to the table and with the right people and the right dynamic your business will go from strength to strength. However a partnership that doesn't go so smoothly can be messy and not end well...
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    How do people go about getting into an equity partnership?
    What is involved in getting a partnership up and running?
    And what advice do people have to ensure a successful partnership?


  • Comments

  • Rural Community

    We are involved in two equity partnerships.

    The most recent partnership is still in it's first financial year. We were fortunate that we had friends who were keen to be involved (and also manage the property) and the bank put us in touch with the other two parties. I do the budgeting and admin for the partnership and my husband has an overseeing role within the business. For us, a good relationship with the Bank and networking was invaluable in finding our partners and also having a good reputation meant that people were keen to be involved.

    We looked at quite a few farms, and put offers in on two others before securing the property. It was a real journey to get it going. Lots of meetings, reports, budgets, emails etc. We made sure we used a good lawyer and have clear processes in place, for example if anyone wants money out.

    Our initial budgets were all very conservative, with the thinking that it is better to under-promise and over-deliver, rather than the other way around.

    I think it's important to have goals set (particularly around repaying debt vs taking $ out) and understand what each partner wants out of the deal... hunting access, learn about farming, keep a horse, regular drive around... whatever it may be.

    One of our main focuses (and I think one of the keys to a successful partnership) is communication. The partners put in a lot of money so I think it's really important to keep everyone in the loop, give them some value. I do an update roughly every 2 months with updated budget and reports and also a newsletter, which is laid out like the front page of a newspaper. The newsletter is basically an update with what has been going on, with an explanation of why certain decisions have been made, a word from the farm manager, a Health and Safety update and any other info of interest.

    I also normally put in a photo or something to liven it up. The non-farming partners seem to enjoy getting this. The reports are great but the newsletter is a bit easier to digest, especially for people without a farming background. We also keep in touch with the other partners through phone and email in between. It's made clear that they can ring any time if they have any queries.

    I think it's also really important to build a relationship with the other partners and have a bit of fun! Get together for a meal, a catch up at duck shooting etc.


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