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Family Succession The no-family DILEMMA If children aren't interested in taking over Y the family farm, you need a succession plan. by Melissa Hansen ou've invested your life in building a vineyard, winery, or other agricultural enterprise, pro- ducing a high-quality product with a topnotch reputation. For some, the business can be left to children to continue the family legacy. But what if you don't have children interested in the family farm or winery? Bob and Cathy Betz were in that very dilemma several years ago. Betz, who just finished his thirty-eighth grape harvest in Washington State, admits that some of the physical demands of being a winemaker, like doing punch downs, dragging hoses and moving barrels, are getting harder. After Betz and his wife, Cathy, talked about retirement with their two daughters several years ago, they realized that they needed to make a succession plan. Wineries such as Leonetti Cellars and Quilceda Creek are fortunate in having family to continue the wine busi- ness, Betz says. "One of our two daughters, Carmen, works in the family winery in marketing, but neither daughter was in a position to take over and manage the business," he said. "Cathy and I had invested ourselves so fully in the winery that we realized we needed to do something to ensure its continued success. So we began a well-thought-out process to look for a buyer." Betz is an icon in Washington State's wine industry and an outspoken ambassador for Washington wines. He's been part of the industry since the 1970s, working for nearly 30 years at Chateau Ste. Michelle before crushing his first vintage in 1997 for Betz Family Winery and build- ing a state-of-the-art wine facility in Woodinville in 2005. Betz Family red wines have received all kinds of acco- lades, including red wine of the year titles from consumer and wine publications; Betz was named winemaker of the year in 2007 by Sunsetmagazine. For a time, he was one of only two in the state to hold the prestigious Master of Wine qualification. In developing a succession plan, Betz strongly recom- mends "getting your house in order." Do everything pos- sible to produce a high-quality wine, manage the business successfully and profitably, and get your winery financial and business aspects in order, he said during an 100 YEARS Because we offer the QUALITY you expect and deserve! Steve and Bridgit Griessel, left couple, are learning the DNA of the Betz Family Winery founded by Cathy and Bob Betz, right couple. interview with the Good Fruit Grower. "You do not want to sell in a position of desperation." Succession plan The process of getting things in order can take sev- eral years. Allow plenty of time for preparation, getting financial documents assembled, and paying off loans. He admits that after getting their financials together, he was surprised at how well their winery looked on paper. "We'd just been hard-working fools all these years, totally focused on the winery. We didn't realize we'd be looked on so favorably by buyers." The Betzes chose an acquisition/investment firm in Seattle to represent them. Confidentiality was a priority. They found out there was a lot of national interest in their winery, and after months into the process, they inter- viewed four potential buyers—two well-known Napa Val- ley wine companies, a Pacific Northwest wine company, and a husband and wife looking to buy a West Coast win- ery. Ultimately, they chose the husband-and-wife team, Steve and Bridgit Griessel. While Betz wasn't ready to completely retire, both he and Cathy wanted more time to be with grandchildren and to volunteer for charity events like the Auction of TIPS for succession planning B ob Betz and Steve Griessel offer these sugges- tions to growers, winemakers, and others involved in agriculture interested in developing a succession plan: 1.Plan ahead. • Allow several years to develop succession plan. • Get your financial house in order, trends going in right direction. • Have available past tax returns, profit/loss state- ments, and critical loans paid off or already renegotiated. • Allow plenty of time to find a buyer and negotiate a deal. It won't happen in a few months. 2. Decide what you truly want to accomplish. • Are you really ready to fully retire from something that was your life? • Define the transition period. A true succession plan has a multiyear transition period. However, if major changes to the business are planned, the transition time frame should be short. 3. Understand and be honest when valuing your business. • Overinflated values will result in a lot of talk but little action from interested parties. 4. Retain a professional organization. • Use a merger and acquisition or investment firm when selling a business. Find one that can conduct confidential, high-level negotiations. Asian & European Pear trees are still available 100 Years at Newcastle, Ca 800-675-6075 ORDER NOW! FowlerNurseries.com 14 DECEMBER 2012 GOOD FRUIT GROWER 5. Keep plans confidential. • Draw up a robust confidentiality agreement. When news leaks out, the value is almost always reduced, Griessel said. Betz added that even his children did not know of their plans to sell the business. –M. Hansen www.goodfruit.com PHOTO COURTESY OF BETz FamilY WinERY