An equity partnership was more likely to succeed if the right people entered it.
"You can change a farm but you can’t change people."
Sheer determination and grit could get people a long way in life, he said.
The PGG Wrightson Real Estate consultant had been interested in equity partnerships since his parents entered one, and he had helped form many of them during his 20 years’ experience as a rural banker for Rabobank.
"I often hear of equity partnerships that don’t go right, and I’ve seen my fair share of them."
A partnership usually went "pear-shaped" due to the people and the amount of debt involved, he said.
"Nipping problems in the bud early does help."
He recommended that people got a mentor to bounce ideas off and should not be afraid to ask for advice.
"People want to help people that are trying to help themselves."
An independent chairman was a great way to hold people to account, especially if all the shareholders were farmers.
"They are all expert farmers when they’re not farming it."
Shareholders which had a diverse range of ideas could be healthy.
"You just need to have an alignment of values."
Good professional advice was worth paying for, he said.
"You’ve got to spend a dollar to make a dollar."
No two deals were the same.
If a farm owner was leasing their farm and they wanted it returned in a better state, they should ensure the deal left something in it for the leasee, so they could afford to invest in the farm, such as applying fertiliser and regrassing paddocks.
He hated advertising leases.
"All you get is a deadline private treaty, a tender situation, which comes down to price and ultimately everyone loses because it is too dear for the leasee — the leaser makes a short-term gain, but it affects them long-term."
An open conversation was needed to ensure it was a "win-win" for both parties.
Anyone entering an agreement should "enjoy the ride".
"Don’t hang out waiting for the enjoyment 10 years later; enjoy it on the way through."
