Who Comes Next? Dairy Succession Options Beyond Immediate Family

Running a dairy operation demands constant attention to daily tasks, often leaving little time to plan for the future. Yet, asking "What’s next?" is a crucial step for long-term success, especially when traditional family succession isn't a viable path.

In today’s evolving agricultural landscape, many next-generation family members pursue careers outside of farming. This shift calls for a broader approach to transition planning. If you're preparing for succession without immediate family, consider the following strategies and best practices.

If Family Isn't in the Plan, Who Is?

When family isn't positioned to take over the dairy business, consider these viable alternatives:

Tenured Key Employees

Does your operation have a dedicated employee with deep knowledge of your business model? Their experience and commitment may make them ideal for ownership or partnership opportunities.

Neighboring Dairy Farms

Start casual conversations with nearby dairy operators. They may be considering similar succession paths and open to mutually beneficial planning.

Extended Family

Sometimes the answer to the next generation may not be immediate family. Don’t overlook nieces, nephews or cousins who may have a desire to step into ownership. 

Dairies Beyond the Neighborhood

Stay active in the industry and connected with your professional network. Other dairies looking to expand may be interested in a transition opportunity that aligns with their goals.

Do You Need a Succession Planning Team?

Short answer: Yes.

Transitioning a dairy business is complex, time-consuming, and often emotionally challenging. A well-rounded, agriculturally experienced succession team can simplify the process and help avoid costly missteps.

Your team should include:

• A transition planning coordinator
• An attorney
• A financial consultant or tax preparer
• A banker
• The future ownership group

Together, they can guide you through the financial, legal and operational nuances of succession.

To explore the differences between transition planning and estate planning in greater depth, check out our on-demand webinar about succession planning.

Addressing Taxes, Capital Gains and Creative Financing

If the tax implications and financing logistics seem overwhelming, you're not alone. These elements are often intricate, which is why your succession team is invaluable.

They can help:

• Minimize tax burdens for both seller and buyer
• Evaluate capital gains scenarios
• Explore creative financing options with your loan officer that meet everyone's financial needs

Each situation is unique, so careful planning is essential.

After the Plan: Supporting Future Ownership

Planning doesn’t stop with the transfer. Set the next ownership group up for success by using your team to:

• Establish a clear operational roadmap
• Create financial transparency
• Lay the groundwork for the next generation's eventual succession

Start Early, Stay Focused

There is no one-size-fits-all succession plan. Time often feels scarce, but the earlier you begin planning, the more options and peace of mind you’ll have.

Ask the tough questions, build your team and explore every avenue. In doing so, you'll ensure a smoother transition and a future that reflects your vision.

Ready to Plan Your Dairy Operation’s Future?

Connect with Compeer Financial's experienced succession planning professionals and team of dairy industry experts, like senior dairy lending specialist Curtis Gerrits, to begin mapping your next steps.