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©Whitehead Monckton 2012 A Practical Overview of the Rationale and Process of Joint Ventures Janet Goode and Dan Tozer October
©Whitehead Monckton What are we talking about? Merger or Collaborative working The Pros and Cons of each The Structure of mergers The process to go through Pitfalls and how to avoid them 2
©Whitehead Monckton Collaborative working Collaborative working is the bringing together of land, capital and skilled management in an agreement between two or more parties, each running their own business, rather than forming a new vehicle. 3
©Whitehead Monckton Merger Merging is the process of forming a new entity from joining together two or more existing companies or businesses to create a new combined business. 4
©Whitehead Monckton Types of Collaborative Working Contract Farming Contract Rearing Share Farming Labour & Machinery Sharing Machinery Sharing Labour Sharing 5
©Whitehead Monckton Merger considerations Merger is a big undertaking so only do it for the long term Logical progression from collaborative working arrangements 6
©Whitehead Monckton So Why Merge? Economies of scale and reduced unit cost in the production and delivery of produce to the market Higher productivity One management Increase of access to more farm land in one title Combining size for the purposes of grant applications/EU registrations Insurance costs Banking benefits 7
©Whitehead Monckton So What’s Stopping You Work culture and ethics Confidence Liabilities Control Change 8
©Whitehead Monckton Resolving issues Ring fencing liabilities Balancing power in the articles Retaining existing basis of management 9
©Whitehead Monckton ©Whitehead Monckton 2012 Go for it Structure 1 : ConsiderationShares/Assets (£/value) Farming Business A Farming Business B 10
©Whitehead Monckton ©Whitehead Monckton 2012 Go for it New Company Structure 2 : Shares/Assets Shares/assets Value Farming Business AFarming Business B 11
©Whitehead Monckton ©Whitehead Monckton 2012 Go for it Structure Indicators: -Is one farm significantly bigger or better managed than the other 1 -Is there a need to ensure equality in the management or accounting2 -Could both farms benefit from clean sweep 2 12
©Whitehead Monckton ©Whitehead Monckton 2012 So What Will You Need to Do? ProcessTimescale Talk to the other parties? Due Diligence4-8 weeks Heads of Terms Documentation1-2 weeks Negotiation on the Detail2-3 weeks Finalising the Sale Agreement2-3 weeks Re-registrations and Outside Consents Practical Signing1 week Post-merger Registrations1-2 weeks 13
©Whitehead Monckton ©Whitehead Monckton 2012 Pitfalls and Not falling into Them Do not try to tie everything up too rigidly from day one- allow some flexibility for the new combined entity to develop. Do not push ahead too far too fast without checking the key issues. Do not try to do it yourself. You are busy enough already. Take legal and accountancy advice throughout. Do not get overloaded. Merger is a big task so plan ahead and dedicate resources. Make sure everyone is on board before you start. 14
©Whitehead Monckton ©Whitehead Monckton 2012 The future Business growth Greater market opportunities Larger scale operations Success 15
©Whitehead Monckton ©Whitehead Monckton 2012 Contact Janet Goode & Dan Tozer
©Whitehead Monckton 2012 Property Issues for Trustees Jonathan Stallard October 2012.
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