Cooperation Tools for Farm and Marketing Associations

10. Do we have everything we need?

  • Work steps

    You can download the content of this section as a Word file → here.

    Why is it relevant to discuss this question?

    In this field of work, we focus on creating awareness and overview of the following values, which do not appear in the balance sheet or in contracts and agreements:

    1. The long-term development of the equity accounts e.g. with a GbR
    2. The term and maturity of the lease and rental agreements
    3. The term and notice periods for loans, direct loans, participation rights, etc.
    4. The development and distribution of the inventory assets
    5. The evaluation of customer quality and sales markets.

    In what context do we recommend addressing this question?

    From our experience, it is particularly useful to have this overview when new shareholders join the company, when preparing for a generational/leadership change and clarifying pension arrangements, to prevent crisis management, and to establish good long-term shareholder relationships.

    Work steps

    1. Collect the values of everything available in the operation. First write down these "values" without any evaluation. Everything may be named, large or small, of great and small significance, important and less important.
    2. Try to show the development of these values, for the more years this is possible the better.
    3. Include all terms and notice periods from the chapter Contracts.
      • Areas and area equipment
      • Buildings
      • Funds
      • Equity accounts
      • Rental and lease agreements
      • Machines
      • Animals
      • Other inventory
      • Brand value, value of the sales markets, ...
      • Shareholdings
      • etc.
    4. Go through this list together and clarify whether there is a common understanding of the individual points. If necessary, correct and specify.
    5. Carry out a joint assessment of the circumstances and discuss any necessary adjustments/responses, e.g.:
      • All rental or lease agreements have the same term and expire at the same time. Is there a risk involved? Can individual contracts be extended prematurely?
      • Assume that the equity accounts (in the case of a GbR) grow more and more:
        • What happens if someone drops out of the partnership?
        • Where does the equity value lie?
        • Is this resource available during a dispute?
        • What happens with the associated tax burden?
        • Can it be regulated differently?
      • Sales in our farmyard marketing are slowly but steadily increasing, sales via wholesalers are steadily declining, while at the same time the share of purchased goods is rising sharply.
        • Are we aware of thetax limits of acquisitions?
        • Are we developing from a production company to a trading company?
        • Is this development intended or has it just happened?
      • The value of the buildings decreases
        • Is the capital of the company "eaten up"?
        • Are we on the way to becoming a discontinued company?
        • Is there an inventory backlog?
        • Is our profit too low?