Key reflections from the season so far – October 2021

We are now mid-way through the farm sale season. This is one of the busiest times of year for the team at RMF Silva, with all of our agribusiness lawyers heavily involved for vendors and bidders. As with everything in life just now, we are learning to expect the unexpected! With so much uncertainty in our lives from Covid and environmental change, it’s important to remember to control what we can, accept what we can’t and not sweat the little stuff.

For those in the market to buy or sell a farm, here’s some key reflections from the season so far:

  • Pull the professional team together early and don’t work in silos. Real Estate Agent, Environmental Consultant, Banker, Accountant and Lawyer should all be working together with the client front and centre.
  • Vendor due diligence and preparation is just as important as purchaser enquiry. This phase is crucial to trouble shoot and fix any problems before a property goes to market and ultimately goes to fetching the best price.
  • Make sure your team and the approach taken reflects current laws. A good example are the new Agreed Allocations tax laws. This requires extra thought and a new approach to apportioning values and takes a bit of time to get it right.
  • Work closely with your environmental consultant, the irrigation schemes and Ecan in terms of  water and nutrient loadings. This is a difficult time for Ecan as OverSeer goes under the spotlight as a regulatory tool.
  • If buying, make sure the sensitivity analysis is spot on – How does the purchase price look if one or a number of the following change:
    1. Production levels
    2. Produce price
    3. Cost base
    4. Interest rates
    5. Environmental constraints.
  • Keep perspective – it’s quite rare to have a true “must buy” or “must sell” situation. That mindset can induce panic and bad decisions. Not a great place to be when 8 figures are involved!
  • Enjoy the process!

We are here to help and look forward to working with our clients and fellow professionals.

Tim Silva

October 2021

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