The 5 key criteria for farm buyers
Buying a farm is often a crucial moment in a farmer’s or investor’s career plan. With over 20 years‘ experience of helping farmers set up in business, we’ve kept a close eye on the trends and needs of buyers. When clients come to us looking for the ideal farm property, we understand the importance of pinpointing their precise criteria. That’s why we systematically offer a personal interview before any project. It’s our job to select the farm that matches as many criteria as possible. While keeping in mind that the perfect farm simply doesn’t exist! These criteria, which can vary depending on the project, play a decisive role in the selection process. In this article, we will look in detail at the five main criteria we have identified over the years, providing an essential guide for those considering an investment in the agricultural sector.
1 - The production sought
Dairy, beef, arable, sheep and goat, equestrian, market gardening, viticulture… anything is possible. In general, the choice is guided first and foremost by an attraction to a particular type of production, whether through family or professional experience, or whether the production was discovered during the applicant’s training. In the case of setting up in association, the aim may be to develop existing production or to diversify the business by introducing a new product to the site. Farming, whether in livestock or crop production, is first and foremost a job for people who are passionate about what they do, a job that provides food for all French people.
2 - The size of the production tools
The search for a farm depends on whether you intend to make farming your main or secondary activity. In addition, the number of people involved in the project is a determining factor. For example, a farming couple wishing to expand and set up one or more children will be looking for a larger farm than someone simply wishing to extend the existing family farm.
The size of farms has tended to increase in recent years. The human factor is becoming very important. Managing staff, where necessary, requires special skills.
3 - Geographical location
Geographical location is often a crucial criterion for a number of reasons. Applicants often want to stay in their home region, or move closer to it after a period away. This generally enables them to maintain their family ties, while at the same time gaining an in-depth knowledge of their environment and the local players involved in the project. However, for some, the possibility of changing region, or even country, can be a determining factor in exploring new opportunities, especially if their current region no longer meets their needs. This criterion sometimes needs to be put into perspective because of the development of high-speed transport, which ‘brings’ regions closer together. Easy access to services and shops is often a plus, helping to combine professional and private life and provide a pleasant living environment.
4 - The financial aspect of the project
This is often the decisive point. Self-financing is essential; it can be difficult to set up a project without it, because banks are sensitive to it. This funding can come from a variety of sources: help from family or partners, money set aside, sale of private property or a previous farm, recovery of shares when leaving a company structure, etc. The profitability of the business is also essential, and is illustrated in particular by the EBE that the business will be able to generate (which varies according to production, the structure of the business, the age of the buildings and equipment, etc.). The selling price is also decisive: it will be studied by the buyer and his partners (bank, management centre, etc.) in the light of the market, but also of his financial capacity (capital contribution, profitability). A successful transfer requires a meeting and agreement between a seller and a project owner. A poorly positioned selling price is bound to have an impact on project sponsors.
5 - The environment in the broadest sense
The layout of the farm and its equipment can be essential criteria, depending on the project: functional buildings, specific equipment (cubicles or not, milking robot, etc.), access roads to pastures, the structure of the land with good-sized plots, the presence or not of water or irrigation points on the land, etc. It can also be a question of the immediate environment: for example, the proximity of neighbours can be problematic if there are odour nuisances or excessive noise. The site’s accessibility is also important: easy access for the milk collection lorry or various suppliers, proximity to main roads if hosting or selling at the farm, etc. Finally, the presence of agricultural partners (CUMA, ETA, cooperatives, etc.) is essential.
This list is not exhaustive. The search criteria are of course specific to each project and to each farmer, depending on his or her experience and expectations. In all cases, they need to be carefully studied before embarking on the project, so as to maximise the chances and avoid wasting time. After all, every human being, and therefore every project, is unique. That’s why a personal interview with a candidate is essential before any property selection. This maximises the chances of success!
Marie De Leest
Sales and administrative assistant