Trust important in three-way equity partnership, farmer says
Dave and Hayley Vaughan, of Lee Stream, James and Nikki Hall, of Middlemarch and Sam Kane and Cynthia Robson, of Wānaka, launched an equity partnership in Hillcroft at Lee Stream six years ago.
Mr Hall and Mr Vaughan spoke about the partnership at a Beef + Lamb New Zealand event in Balclutha last month.
Mr Vaughan works on the 590ha farm, running about 4200 ewes, 1100 hoggets and 100 cattle.
Before entering the partnership, Mr Vaughan worked in a senior role at Waipori Station for Pāmu.
He never regretted making the move despite taking a 40% pay cut to enter the equity partnership.
"This is my dream and I've landed it."
However, working in a corporate environment taught you to be accountable for your decisions, he said.
The Vaughan family own a dozen student flats in Dunedin, which were used as "a vehicle" to enter the equity partnership.
"We were prepared to sell those to get into a farm but the way the negotiations went it didn't happen like that, which was a godsend because we didn't want to sell them."
The student flats were a reliable income for his family, Mr Vaughan said.
"They give us much more capital gains to date than the farm."
As the Wānaka investors were the previous owners of Hillcroft, entering the partnership progressed a farm sale and the Vaughan family could retain their student flats.
"We brought them in for a five-year term and we are past that and everybody is keen as to stay on."
All parties in the partnership met three times a year for a formal business update.
Trust was a "huge" part of the success of the partnership.
"We have such a good relationship we can talk openly."
He enjoyed sharing the successes and ideas of the farm business with the partnership shareholders.
"Being in a partnership makes us accountable for every decision we make and keeps us focused on running the business as sharp as we can and I think we do it better from being in the partnership."
A farm management package was agreed on at the start of the partnership.
They had talked about implementing a plan for changes in remuneration but it never happened.
"Everyone said 'let's just give you an increase and we'll move on' so we haven't really dealt with that properly but our relationship is strong enough we can have a conversation when required."
Mr Hall said he and his wife entered an equity partnership with another couple in a Southland dairy farm about nine years ago.
The Halls owned half a dairy farm and a sharemilker ran the herd.
Trust was an important part of a successful partnership including with real estate agents and bank managers, he said.
"We have met some good people and we trust each other ... it is all about people."
He enjoyed how an equity partnership allows an experienced farmer to help a younger farmer enter farm ownership.
"That's where I get a kick, the new wave coming through with all the good, new ideas."
When he met the Vaughans for the first time, he had a good feeling about entering an equity partnership with them.
"Sometimes you have to go with a gut feeling and my gut said 'go'."
Mr Vaughan agreed.
"We just clicked after one meeting, we said 'right, let's go shopping'."
shawn.mcavinue@alliedpress.co.nz
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