Individuals pool their capital with others in order to gain an ownership interest in a larger property. Quite often there will also be a component of bank debt as the partners borrow funds to purchase the farm.
What are the benefits for equity partners?
Equity Partnerships can be good a way for:
Often individuals who already know each other agree to set up an equity partnership. Or you can be put in touch with other people who might be interested in this kind of investment opportunity.
The preferred ownership structure for an equity partnership is usually a company. The company has a number of shareholders, with shareholding based on the amount of share capital that individuals contribute to the partnership. One shareholder generally takes the role of farm manager, on salary. Other possible structures include trusts and limited partnerships to establish the joint venture arrangements. It’s important to work through the structuring options to establish what best suits your situation and what you want to achieve.
A due diligence process is critical, to assess the potential risks and benefits.
Contact us if you want to explore the possibility of an equity partnership further.
We can meet with you to analyse what would work best for you to achieve your goals, liaise with other specialists on your behalf and prepare the appropriate key documentation.