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When You Want to Sell Your Poultry Farm - Some Practical Advice

Date: 04/26/2019

Over the past couple of years, we have seen an increase in poultry farms being bought and sold.  It is fairly typical to see a farm on the market for months before it is sold. Sometimes, this is due to credit issues for buyers such as down payments, equity, and credit history.  However, there are qualified buyers out there looking for farms, and it is essential to be ready when they come along.   I wanted to obtain some good advice for farmers who are considering selling their farms.  Robert King, a real estate agent with Southeastern Land Group and an owner of Poultry South, LLC presented me with a list of tips for sellers. 

  1. “Get your financials in order.” This is the first item on Robert's list.  "Poultry farms are businesses, and buyers and bankers look at them as such.  When businesses sell, savvy business people want to know how the business has performed historically.  Poultry farms are not different.  Make sure to get all income and all expense information together for at least the last three years, and don't be offended by a potential buyer wanting to see this information.  Be sure to redact any social security numbers or EIN's before providing the information to a buyer."

It’s true.  Three years' worth of tax returns are needed on a farm to study the historical income and expenses. Bankers need them for loan processing.  No need to worry if a lot of changes have occurred in the past three years or if you have multiple farming enterprises combined on the tax returns. All of that can be dealt with and documented to get a clearer idea of how the poultry farm is performing. 

  1. “Keep raising chickens!” Robert added an exclamation mark to this one.  "One of the biggest mistakes we see are farmers that make the decision to sell and then just quit.  Businesses sell best when operating well."

He is correct.  When you arrive on a working farm, you get the sense that it is productive and making money.  Sometimes a non-working farm feels lifeless and barren.  Some farms are literally deserted once they are placed on the market for sale.  Keeping the farm in production also keeps the farm in the integrator's rotation for bird placement.

  1. “Make the farm look the best you have ever seen it.”  “Eye appealing farms sell faster and for more money.  Every time.  Clean out the control rooms, clean up feed spills, keep the grass mowed, and the drainage ditches flowing well.  If you have bare ground, get grass on it.  Make sure your entry doors are all working well.  Blow down the inside of the houses and make sure your feeder and drinker lines are level.”

Like it or not, we all judge based on a first appearance.  Making sure the farm is tidy, the roads are fixed, and the grass is mowed will be worth it.  Pick up any trash and reduce clutter.  When you enter the farm try to take a look and think of a stranger's first impression upon entering the farm.  Consider repairing small things that are more cosmetic, even if these repairs are not required by the poultry company.

  1. “Get a list of upgrades from your integrator for a new buyer.” "The list for you to stay on or go to top pay may be totally different than for a new owner to get a contract,” Robert advises. 

We all know that poultry management is busy, so the sooner you can arrange for them to complete a walk-thru the better.  It also takes time for the equipment companies to get a bid together.  If you are not completing the upgrades yourself, obtaining a bid for upgrades can cut a buyer's loan processing time.  Keep in mind that if it takes some time for the farm to sell, this may need to be re-done. 

  1. “Make sure your Waste Management Plan is up to date.”  “If you are a CAFO(Concentrated Animal Feeding Operation) make sure all those requirements are complete.  You might consider getting a CAFO inspection completed to make sure you are in compliance.”

Environmental issues must be addressed for a buyer's loan to close.  Waste Management Plans are mandatory as are CAFO registration and any permits, if required.  Sometimes permission can be given to NRCS (Natural Resource Conservation Service) to transfer a Waste Management Plan over into the new owner's name.  Addressing these issues can save a lot of time since NRCS typically has a waiting list. 

  1. “Know when you need help.” "If you have never sold a business or poultry farm before, you probably don't have the knowledge you need for it to be a smooth transition,” Robert says.  “There are many aspects to a poultry farm sale.  The business, the real estate, the equipment, the government regulations, and all sorts of issues with potential buyers and how they may be looking to fund a transaction.  A knowledgeable and experienced poultry farm real estate agent can help smooth out many of the bumps along the way, help you comply with all the requirements, and help you know what to expect."

It has been my experience that every buyer, seller, and farm are different.  A good real estate agent that understands the poultry business will know enough about upgrades, cash flow, pricing, appearance, and environmental issues to be able to guide you through the process.   They can also weed out those people who are just curious so that you do not have to.  Think about using these tips if you are considering selling your farm.  If you are interested in contacting Robert King call him at 256-252-9239 or email him at [email protected].