dairy-farm-owner

Mike Bossy,
CA, CFP, TEP, Canadian Association of Farm Advisors (CAFA), is president and founding partner of Bossy Nagy Geoffrey Chartered Accountants. His background in accounting gives him a broad range of knowledge in areas such as law and taxation. He’s been an advisor for more than 25 years, specializing in business and farm transition.

A dairy farm owner wanted to hand the operation to his son. But the two argued often, and dad wondered if they shared the same goals.

Enter Mike Bossy, president of Bossy Nagy Geoffrey Chartered Accountants, and an advisor for more than 25 years.

His goal is to help primary producers and agri-business owners, which make up 70% of his book (the rest are a blend of business owners, including manufacturing and retail), mitigate conflicts and make a smooth transition.

His decision to specialize in agriculture is no coincidence. Bossy grew up on a tobacco farm in Tillsonburg, Ont.—the city in which his firm now resides.

To gain insights about the father-and-son relationship, Bossy used the Kolbe Index A test, which includes 72 behavioural questions. After completing it, each received a score and was categorized. The test showed the son was more visual, while the father needed hard facts.

It helped the parties understand what motivated each, and in turn changed their conversations.

Once they were able to better communicate, Bossy took them through the structural aspects of succession. The two did, in fact, have common goals: they wanted to double the size of the business from 200 cows to 400.

But analysis of the finances showed they weren’t yet ready to buy another farm, so they decided to grow organically for two years. They used cash-flow surplus to pay down debt, and the natural appreciation of land value built equity. When they were more financially stable, they went shopping for more land and livestock.

During that time they also mapped out responsibilities. Dad was better at cropping, so he’d handle decisions like which fertilizers to use. Meanwhile, the son was good at breeding cattle.

When it came time to transfer wealth, Bossy ran the parents’ net worth through various scenarios.

If the business is sold to a third party, he subtracts taxes from their total net worth. He also considers any children who aren’t taking over the farm. Do they have to wait until death to receive their inheritances, or do they get them now?

Then he discussed the parents’ retirement needs, factoring in cash flow from the farm, redemption of shares, and repayment of loans.

Bossy established a purchase price for the farm and terms of repayment, and determined how much of any outstanding debt is forgiven at death and how much is left to surviving beneficiaries.