This medium-sized land owner dates its origins back more than 100 years and was Playfair Partnerships’ first client, albeit at that point it was part of a larger family-owned diverse group of companies with a disaffected shareholding structure and high levels of debt.
A lack of profit and a lack of cash threatened the survival of the business and action was needed.
This required complex shareholder negotiation and restructuring but resulted in the disposal of loss-making businesses and a new shareholding structure that more appropriately aligned itself to the family involvement.
This had been established for some years, but footfall was not high and although this part of the business was not losing money, neither was it contributing much profit and it was tying up capital in land and stock. It was therefore sold via a trade sale and the cash generated was used to invest in the property side of the business.
The cash generated was invested in upgrading and converting the farm buildings into commercial rental units which generated progressively increasing rentals.
Whilst there was no need to plan for younger management at this stage, there was a need to plan to keep the wealth within the family. Like most farms, the management had turned to creating rental income from their outbuildings to supplement the sometimes-meagre earnings from farming. Unfortunately, this creates a tax problem for the next generation. The solution was to hive off the non-farming activities into a new company and to create a shareholding structure involving a trust for the children and grandchildren.
Following the restructuring of the business, both the farming and non-farming interests are profitable, debt-free and investing in future growth. The assets are now structured to mitigate inheritance tax giving comfort to the next generation, whilst Playfair Partnerships continue to provide financial management and advice.
“Playfair Partnerships arrived fortuitously at a time when our farming/horticultural business was performing badly and worsening. A firm but friendly “stick and carrot” approach quickly persuaded us to be ruthless if we were not only to survive but grow. In addition, they have been most successful in re-structuring the family share-holding happily for all, in creating a trust to minimise IHT and also in building good and trusting relationships between themselves, us and our next generation.” – Managing Director and Shareholder