transferring the fishing business l.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Transferring the Fishing Business PowerPoint Presentation
Download Presentation
Transferring the Fishing Business

Loading in 2 Seconds...

play fullscreen
1 / 40

Transferring the Fishing Business - PowerPoint PPT Presentation


  • 176 Views
  • Uploaded on

Transferring the Fishing Business. Sunny Rice - Alaska Sea Grant Marine Advisory Program Petersburg City Council Chambers January 18, 2006. Why have this workshop?. Statewide, the median age has increased from 29.3 in 1990 to 32.9 in 1999. 32%. 39%. 47%. 38%. 36%. My Interpretation.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Transferring the Fishing Business' - efrem


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
transferring the fishing business

Transferring the Fishing Business

Sunny Rice - Alaska Sea Grant Marine Advisory Program

Petersburg City Council Chambers

January 18, 2006

slide6

32%

39%

47%

38%

36%

my interpretation
My Interpretation
  • Community wide, we appear to be holding steady
  • IFQs are becoming more consolidated
  • This is not unique to Petersburg, nor to fishing, but we may be more vulnerable because of our dependence on fishing
  • A large number of the permits and quota are held by older fishermen who may be considering retirement
  • We need to have younger fishermen in a position to buy when they are ready to sell. Younger fishermen have different barriers to entry than the previous generation did.
  • This is not a crisis today, but we can’t be complacent. We should start planning now to keep it from becoming one
the problem
The Problem
  • First raised by Kris Norosz and Eric Rosvold
an imaginary but typical petersburg limit seiner
An Imaginary but Typical Petersburg Limit Seiner
  • Brings in:
  • 60,000 lbs halibut x $3/lb =$180,000
  • 125,000 lbs dressed blackcod x $2.45/lb = $306,250
  • 900,000 lbs salmon x .16 / lb = $144,000
  • Golden king and tanner crab =$45,000
  • Total = $675,250
to buy out this business
To Buy Out This Business
  • $ 550,000 for the vessel
  • $ 150,000 for the equipment
  • $ 45,000 for the SE seine permit
  • $ 180,000 for the crab permit
  • $ 1.02 million for halibut quota (60,000 lbs x 17/lb)
  • $ 2.37 million for the blackcod quota (198,000 round lbs x 12/lb)
  • total = $4.315 million
part of the solution
Part of the Solution
  • Marine Advisory Program Focus - Education
  • Teach entering fishermen the skills they need to run a modern fishing business
  • Help exiting fishermen prepare for the transition and encourage them to sell businesses in home communities
spreadsheets for commercial fishermen
“Spreadsheets for Commercial Fishermen”
  • Updates and modernizes previous publication providing planning and bookkeeping forms - Excel spreadsheets
  • Geared toward newer fishermen to help plan and track their fishing business
  • Plans to create a curriculum using this for use in school and workshop classrooms
transferring your fishing business
“Transferring your Fishing Business”
  • Based on similar document from the University of Minnesota for farmers
  • Focuses on information needs of fishermen wishing to engage in a directed transfer of their whole business to an heir or other buyer
  • Basis for the outline of this workshop
factors to consider seller
Factors to Consider - Seller

The seller’s financial

security in retirement

  • How much has been saved for retirement?
  • What are the seller’s expected living expenses?
factors to consider seller16
Factors to Consider - Seller

The financial health of the fishing operation

  • What is the business currently worth?
  • Will the business continue to be profitable?
  • Has the business been upgraded to keep up with present needs?
  • Does it earn enough income to support both buyer and seller during the transfer process?
  • How will you determine selling prices?
factors to consider seller17
Factors to Consider - Seller

The seller’s willingness to let go

  • Does the seller have post-fishing plans?
  • Is the seller ready to see the vessel and permits fished by someone else?
factors to consider buyer
Factors to Consider - Buyer

Relationship and trust between buyer and seller

  • Does the seller feel that the buyer is capable of running a modern fishing business?
  • Can both parties be trusted to stick to agreements and consider each others’ interest when making decisions?
  • Do buyer and seller have respectful, positive, and considerate attitudes toward one another?
factors to consider buyer19
Factors to Consider - Buyer

Buyer’s financial position

  • Will the buyer be able to make payments to the seller and other lenders?
  • Does the buyer have debts of their own that will be brought to the business?
  • Is the buyer supporting a family, and will the business be sufficient to provide for them?
factors to consider buyer20
Factors to Consider - Buyer

Buyer’s level of commitment to fishing

  • Is the buyer as committed to fishing as the seller?
  • Under what circumstances would it be acceptable to the seller for the buyer to sell fishing assets?
  • Does the buyer want to fish because it is his or her chosen field, because it is a family expectation, or because nothing else has worked out?
factors to consider buyer21
Factors to Consider - Buyer

Buyer’s level of experience

  • Does the buyer have the business management skills needed to run a modern fishing business?
  • How much experience does the buyer have in these fisheries?
  • Can the buyer gain needed experience during the transfer period?
the meeting
The Meeting
  • The earlier the better
  • Seller needs Statement of Income and Expenses, Balance Sheet, Cash Flow Statement for business
  • Also have a good handle on their retirement needs and savings
  • Buyer needs Balance Sheet and estimation of cash income requirements for family
introduction to the transfer process
Introduction to the Transfer Process
  • Countless ways to actually transfer:
  • Hire buyer as deckhand
  • Fish permits or quota together on vessel
  • Leasing vessel
  • This period can give buyers experience and allow seller to ease out of business while buyer keeps business up-to-date
communication is vital
Communication is Vital!
  • Meet regularly to discuss progress, problems, changes in business - include spouses
  • Put all final decisions in writing
  • Be brief and specific when speaking
  • Try to be positive, constructive, and willing to compromise
  • Listen actively - don’t interrupt
  • Disregard negative statements, focus on points of agreement
we ll talk about
We’ll talk about
  • Financial strategies for directed transfer - JoAnn Rodamaker, CFAB
  • Business entities - Matt Tullar, AKSBDC
  • Tax implications of selling/gifting assets - Rosann Dunham
  • Protecting your business and heirs - Susan Erickson and Sunny
  • Financial help for beginning fishermen - Sunny
treating heirs fairly
Treating Heirs Fairly

What is Fair?

Did you pay for a college education for non-fishing heirs?

Has your fishing heir worked as unpaid deckhand?

Does family value keeping the fishing business “in the family?”

ways to include non fishing heirs
Ways to include non-fishing heirs

Leave fishing assets to fishing heir, life insurance to others

Provide fishing heirs with life insurance to buy out others

Will all cash and non-fishing assets to non-fishermen

Pass all assets on evenly, but provide reasonable terms in will so fisherman can buy out others

top 10 ways to sabotage the next generation of fishermen
Top 10 Ways to Sabotage the Next Generation of Fishermen

10. Pay no attention to wake-up calls like accidents, illness, or major choice point by an offspring.

9. Make sure all your sense of worth, your identity, and life’s meaning come solely from the business. Resist transferring to the next generation. This way they have the least influence and the most stress.

slide32
8. Assume others know what you want. Avoid discussing your wishes about transfer with family members.

7. Hold on to total control of the family business.

6. Refuse to listen to other family members’ viewpoints.

5. Do all you can to block the younger generation from any involvement in goal-setting or decision making until they are middle aged.

slide33
4. Blame others for problems. Stay angry.

3. Don’t discuss the subject of estate transfer.

Keep information from younger family members.This is a sure way to increase family conflict.

2. Avoid planning or making decisions

1. Procrastinate

Don’t write a will or transfer plan. Let the children worry about it after you’re gone

seller or parental financing
Seller or Parental Financing
  • Write and sign a promissory note, include interest rate, payment schedule, what to do if late/no payments
  • Charge a reasonable interest rate, paying tax on interest you receive
  • Expect and demand payments when they are due
other possible sources
Other Possible Sources
  • AIDEA - works with other lenders
  • JEDC - Southeast Revolving Loan Fund - short term loans in conjunction with technical assistance
  • USDA, Rural Development - Value added producer grants
  • US Small Business Administration - loans for small businesses
quality improvement loans and grants
Quality Improvement Loans and Grants
  • Alaska Salmon Vessel Quality Upgrade Program
    • 50/50 match up to $25,000
    • Must supply documentation of fishing in 2003-2005 seasons
    • Projects done by June 30, 2006, include quote
    • First come, first served if score over 70
  • State Division of Investment Loan
    • Requirements same as vessel loan, but interest = Prime -2%
tax and business help
Tax and Business Help
  • Small Business Development Center
  • Alaska Business Development Center
  • PAY YOUR TAXES!
  • KEEP CREDIT RECORD CLEAN!