Is 2019 the right time to sell your ranch?

A strong domestic economy and increased exports are helping to elevate the ranching market this year. In fact, ranching jobs are set to increase around 7% between now and 2022. Consider the following to ensure 2019 is the year you close a blue-ribbon sale on your ranch.

Bruce Hakutizwi

Valuating a ranch

America is hungry for the cattle business. It is estimated that Americans consume over 25 billion pounds of beef a year. While the majority of beef is raised in five states, profitable ranches exist all over the country.

The top five cattle-producing states include:

Nebraska: 19.8%
Texas: 18.9%
Kansas: 17.5%
Iowa: 9%
Colorado: 7.1%

Your location is your greatest sales asset, so the success of your deal will depend on how well you highlight area benefits. Prospective buyers will be interested in weather, market demand, import/export channels and more, so identify the greatest benefits of your location and leverage them to pique buyer interest.

The ideal ranch size

Whether you’re raising livestock for meat or wool, there is a market for ranches of all sizes. The vast majority of feedlots consist of 1,000 or fewer head of cattle, so if you operate a small- to medium-sized ranch, you might have a competitive edge during the sales processes. This is the sweet spot for selling – not so big as to intimidate but not so small as to seem irrelevant.

While larger ranches might be more difficult to sell, these properties will yield greater profit. Help buyers overcome initial sticker shock by outlining the long-term viability of ranching.

Don’t listen to the naysayers; meat consumption is on the rise. It’s true vegetarianism is a popular trend that affected the market in years past, but it turns out the ranching industry has never been stronger. So while meat eating declined between 2008 and 2012, the market is rebounding. Consumer demand for beef, pork and poultry has steadily risen, and 2019 is no exception. Meat alternatives might have fragmented the vegetarian consumer base, but vegetarianism won’t topple the ranching industry any time soon.

In 2019, small, sustainable farms will continue to cement as feasible ranching opportunities. In the past, bigger meant better – more range meant more livestock, which meant more profit. But those days are over. Farm-to-table partnerships and specialty retailers such as farmers’ markets have made ranches of all sizes profitable. Whether you’re selling a 20- or 2,000-head operation, you can confidently boast market appeal to prospective buyers.

The ranch sales process

Selling a ranch comes with a special crop of responsibilities. There are several factors that make for unique negotiations when selling a ranch:

Records: Not only do you have to worry about the standard record-keeping practices, but you will also be expected to provide industry-specific documentation to prospective buyers. This might include information on water rights, zoning, environmental assessments and more. Prepare yourself for extensive buyer cross-examination by coming to the table prepared and with an organized assortment of applicable documentation.
Valuation: Selling any business requires a degree of self-investigation, but especially when it comes to ranches. Ranches house a variety of technologies, livestock, property and other valuable assets that must be considered before listing. Make sure to consider all assets – big and small – when valuating your ranch and leverage this information during sales negotiations.
Land: Another unique element of selling a ranch is the commodity itself. Unlike other business sales, a ranch is a collection of several separately deeded properties. It’s not as easy as signing over the business and being done; the fragmented nature of a ranch can muddy a sales exchange. Be sure to factor the inevitable tax bite of signing over several deeds when developing an asking price.

All of the above comes down to this: You can’t do it all on your own. In 2019, make it a priority to surround yourself with professionals to help sort out the intricacies of selling a ranch. Tax professionals, brokers, business analysts, etc.; these people offer the skills you need to get the most out of your ranch sale. Whether you work with a broker or list your ranch online, connecting with the right buyer, at the right time, is key to roping the deal you deserve.

Bruce Hakutizwi is the director of Dynamis Ltd., owner company of BusinessesForSale.com. He frequently writes about entrepreneurship and small business ownership. Connect@BizForSaleUS.