PIC Kellogg Rural
Leadership Programme
2006
Dan Billing
Business Partner Compatibility
Testing:
Introduction
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“EP”s becoming a more common form of
ownership,
If at the beginning of any investment you could
test all other intending investors.
By combining commonly asked questions and
having them ranked by each person.
AIM:


Develop Business Partner Compatibility test.
Increase personal knowledge of “EP”s.
The way people think when faced with different
challenges/ situations.
 The challenge of establishing trust within a group of
strangers.
 Being impartial and objective enough to understand
each individual, yet having my own voice still.

DISCLAIMER
No
responsibility taken
for actions resulting in
use of information
provided.
PART 1
UNDERSTANDING “EP”s


Defining an EP in simple terms.
Defining in more detailed terms.
Shared capital
 Shared risk
 Achieve high performance efficiencies of scale.

Defining in more detailed terms,
cont.

Sound outline of communication and structure.
Clear, concise business plan.
 A clear investment period.
 Shareholders agreement.
 Clear employment contracts.

Who is investing into “EP”
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First time investors.
Existing equity managers
Passive investors.
Retiring investors
Families.
Evolution of “EP’s

They are not new.

being around since late 70’s in kiwifruit and sheep/
beef.

Having evolved because.
Limited capital from young investors
 To spread investment risk
 Strong balance sheets
 The increasing cost of land

The key to a successful “EP:

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Have good levels of communication
Know your peers
Good levels recording/ reviewing and governance.
Good systems for settling grievances.
“Good relationships between partners and
a common goal for the EP are vital to the
success of the EP.
Failures within “EP”s
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Wrong mix of people.
Mistrust, poor communication.
Lack of planning
Poor advice.
Business systems are weak.
Unrealistic expectations.
Manager Failed.
Poor governance structure.
Interference from share holders.
PART 2
The test and how it works.
The need for a test.
What makes an “EP” work.
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Good balanced people and good business skills.
Good structures of governance.
A above average farm manager
Having cash and growth well managed.
Having property that is suited to intended use
Is simple.
Realistic goals and timeframes.
Shareholders agreement.
Family.
The process of creating the test.

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Stage 1 - the idea. Talking to others to decide
whether it is worth pursuing.
Stage 2 – tracking down relevant people to help
and to gain information.
Stage 3 – building the template and collating
information into questions.
Stage 4 – send it out to be reviewed and then
change, change, change and change some more.
A basic understanding of the test.

What is it about.
A tool to be used in the aid of decision making.
 Consists of commonly asked questions that people
think of when deciding investment partners and
options.
 Having these questions ranked then comparing them
against the group average.

Understanding each page
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Instructions – self explanatory.
Compatibility master page.
Individual test page.
Test summary page.
summary

What.

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What is the test.
Why.
Why is there a need for this test.
 Why did I choose to research this.

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Acknowledge the fact that there is still more
testing to be done before it can be trusted
commercially.
Thanks to all people that have
helped in any way.
Cheers
Dan Billing.