January 31, 2024 • 42 mins
Ever wondered how agribusiness facilities like grain elevators and sugar factories are valued? In this episode, let us explore the world of agribusiness appraisals with Megan Sheeley, an accredited rural appraiser from Crown Appraisals. From her upbringing on a farm to becoming a key player in the appraisal industry, Megan shares the nuances of valuing complex agribusiness properties using diverse appraisal methods. This episode not only reveals the intricate process behind these valuations but also highlights the ethical considerations and personal fulfillment in this unique sector. Join us for a captivating journey into the heart of agribusiness appraisal, where business meets passion.
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Episode Transcript
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Colter DeVries (00:00):
Welcome to the Ranch Investor Podcast.
I am your three-year host,Colter DeVries, accredited land
consultant with the Realtor LandInstitute and accredited farm
manager with ASFMRA.
I'm excited to bring you theexperts on a weekly basis to
hear what's trending, what'shappening, what's going on in
(00:23):
Montana, Wyoming, the West andranches across the United States
.
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Colter DeVries (00:35):
Megan Shealy thanks for coming on the Ranch
Investor Podcast.
Megan Sheely (00:40):
Thanks for having me Colter.
Colter DeVries (00:42):
Megan and I met at ASFMRA American Society of
Farm Managers and RuralAppraisers.
She is a accredited ruralappraiser with crown appraisals
out of Fargo North Dakota.
A seven-year veteran, megan,let's get started.
Simple introduction Tell me alittle bit about your background
(01:05):
, sure so.
Megan Sheely (01:07):
I grew up on a corn, soybean and sugar beet
farm about an hour south ofFargo in the southeast corner of
North Dakota.
I was involved on the farm butreally took it for granted and
didn't really know what I wantedto do.
When I grew up, went to NDSU inFargo and hopped around a few
(01:29):
different departments beforekind of finding my home in the
Ag Econ department.
The whole time my family wastelling me, like just go into
agriculture, you're gonna loveit.
The whole time I was digging inmy 19-year-old stubborn heels
like absolutely not, I don'twant anything to do with the
farm, I'm gonna forge my ownpath.
(01:49):
But ended up getting into theAg Econ department and it was
really the people there thatjust felt like home and it ended
up being a great experience anda great education.
Towards the end of my collegecareer I had the fear of what am
I gonna do when I get out ofhere?
And I had an academic advisorwho I sat down with and he said
(02:11):
you know, you're a lot like me,you like talking to people, but
you're definitely a nerd, so Ithink you'd make a pretty good
appraiser.
Have you ever thought aboutthat?
And so, because he said that'swhat he would do if he wasn't in
academics.
So I didn't even know how tospell appraisal at that point,
not let alone know what they door if it was something I wanted
(02:32):
to get into.
So I called around forinternships and, luckily, crown
appraisals.
Let me come in and serve aninternship for a summer before I
graduated and at that time JeffBerg, the founder of our
company.
He had a new project thatsummer.
He was asked to appraise acotton gin and it was the first
time he'd ever appraised acotton gin.
(02:53):
So he set me out as an internto go research the cotton
industry.
So I got busy doing that and itwas kind of an aha moment for
me because I thought you know,if he's 30 plus years into his
career and he's still doingthings for the first time and
still learning, like this issomething I could get into.
(03:13):
And then I was hired full-timeafter I graduated and have been
there seven years since then andhave since become a partner in
the operation.
And what I thought that summerhas proven to be true Like we're
learning new things every day,every operation we look at is
different and interesting andfun.
So just real, I just feelreally fortunate to to be here
(03:35):
and have this opportunity.
So at Crown Appraisals weappraise agribusiness facilities
.
So that could be grainelevators, fertilizer, negronomy
facilities, seed plants, feedmills, things like that, and
then some more specializedfacilities like sugar beet and
sugar cane facilities, biofuelplants, rice mills, flour mills,
(03:58):
pretty much anything specialtyagribusiness is kind of our, our
specialty.
Colter DeVries (04:03):
Well, that must for the right person.
That must be tremendouslyrewarding.
New challenges all the time.
Very nuanced assets, not a hugemarket for a sugar beet factory
.
That seems like it'd be verychallenging and you get to learn
something new every day.
(04:24):
Try figuring out that marketand applying the science,
appraisal science there.
I would assume what goes intothat.
Are you looking at these assetscost capitalization, comp,
value how do you?
How do you value a sugar beetplant?
Megan Sheely (04:45):
Sure, so everything we do is based on
comparable sales of similarfacilities.
So, even if, even if the themarket is thinly traded and
there are very few sales, salesdo exist.
They have happened and we do ourbest to track those sales down
which presents its own sets ofchallenges, because when you get
(05:07):
these very complex facilitiesand something sells, the county
courthouse usually doesn't havethe full story of what happened
in that sale.
So it it ends up being we arerelying on our network and we're
trying doing our best to trackdown the buyers and sellers and
getting out of them the fullstory of what happened with that
sale.
So everything we do is based oncomparable sales.
(05:30):
We look at it from the costapproach method so what would
this facility cost to build newtoday?
And then we're applyingdepreciation rates based on
depreciation rates that we areabstracting from other
comparable sales.
And then we're looking at thesales comparison approach.
So what have other similarfacilities sold for on a per
(05:50):
unit basis, whether it's perbushel, per ton, per hundred
weight of sugar, whatever therelevant unit is for that
industry.
And the cost and salescomparison approaches give us a
good, a good bricks and mortarvalue of what the facility
itself is worth, what's the land, buildings and equipment worth?
And then we also look at theincome approach and we take we
(06:15):
take the, the operations,historic, owner, operator
financials, we dig deep intothose with the CFO or the
manager or the owner, whoeverthe right person is to really
get an understanding of whatmakes this business tick.
Why are they profitable?
What are the challenges?
We analyze those historicfinancials and we'll either
(06:37):
we'll capitalize it based on caprates that we're abstracting
from those comparableagribusiness sales, and then we
also have a database of EBITDAmultipliers that we'll use.
And so wherever that incomeapproach value comes in relative
to the cost and salescomparison approaches, sometimes
it's less and that might tellus that you know this operation
(06:58):
isn't very profitable.
Therefore it might sell at adiscount relative to the bricks
and mortar value.
Sometimes it comes in reallyclose to those other two values,
which just tells us like thegoing concern operation supports
the bricks and mortar value andthen on occasion we'll see it
come in above that bricks andmortar value, which gives us an
indication that you know there'ssome kind of intangible asset
(07:21):
or blue sky at play here.
Now we aren't full-blownbusiness valuation appraisers so
we can't get into the differentcomponents of intangible assets
, but we do have a network ofbusiness valuation appraisers
that we would work with if aclient needed that.
But it's still a reallypowerful tool to when you're
(07:42):
looking at these facilities thatsell with a going concern
business.
That's the quick and dirtyversion of our extensive
analysis that we would do on acomplex facility.
Colter DeVries (07:56):
These complex facilities, niche businesses.
There is a certain amount, ofcourse, Blue Sky going into that
valuation.
I'm glad to hear that us ranchbrokers are not the only ones
accused of selling Blue Sky.
It's everywhere.
(08:17):
Well, how do you I mean, you'regoing to have to go through that
again how do you narrow downwhat is bullshit and what is
actual, because I mean thesefacilities?
I don't know what a cotton gingoes for, but I would assume a
dairy, an organic dairy, or youprobably deal with a lot of
(08:40):
co-ops, mega big co-ops, thathave their grain handling,
processing facilities.
There's a lot of money on theline there and we're going to
try to pad our numbers as muchas possible.
How do you sift the chaff fromthe grain and filter out the
bullshit?
(09:01):
Yeah, that's a challenge, forsure, then stay confident to
your numbers because I know youappraisers get taken to court a
lot.
Megan, you were just testifyingrecently as an expert witness,
weren't you?
Yes, that's always a funexperience, so you have to
defend your study all the timeand you have to conduct it
(09:23):
understanding that you might endup on the stand.
Megan Sheely (09:27):
Yeah, yeah, a lot, yeah.
So you have to do all of thedue diligence to make sure your
numbers are as reliable aspossible.
Yeah, when it comes tofinancials there's always a
certain degree of that.
You walk into a facility andyou could just tell by the
language that the manager orowner is using what kind of
number they want.
But thankfully we are veryethical in that it doesn't
(09:50):
matter who's paying for theappraisal or what the purpose is
.
Our number is our number.
But it is important when we'relooking at those financials,
trying to figure out howreliable are these numbers and
how reliable are they goingforward.
So say you have a Niagarabusiness facility that's looking
to sell.
There's a certain degree ofstrategy that they can use to
(10:15):
pad those numbers for a fewyears prior to potential sale,
like they could cut back onmaintenance into the facilities.
They could take out half theirstaff, whatever it is.
But you can only do that for solong before the wheels fall off
figuratively or literally, Iguess.
Colter DeVries (10:35):
If equipment starts falling apart.
Like a ranch starving your cowinto profitability.
Megan Sheely (10:40):
Yeah, yep, but you can only do that for so long
before it really wouldnegatively impact value.
And I mean that's just part ofthe process when we're
interviewing the manager or theCFO.
It's just getting to the bottomof what's included in those
numbers.
And thankfully, one of ourappraisers on our team he's a
(11:05):
accredited rural appraiser, he'sa partner here and he's also a
CPA with a business evaluationdesignation, so he has a really
unique skill set that allows usto really dive deep into those
financials and understand thenumbers and where they're coming
from.
So it really gives us a goodperspective and a good base to
(11:27):
rely on him when we're diggingdeep into some of those numbers.
Colter DeVries (11:31):
We bring up something that came to mind a
few times lately.
In particular yesterday we weretalking about appraisals and
buyer sellers the neighboringfarmer with five cents five
cents of opinion on the matter.
It to me as a broker, it isvery important to work with ARAs
(11:55):
, accredited rural appraisersthrough the ASFMRA, because
there's a form of accountabilitythere.
You guys hold each otheraccountable to higher standards
than just the state licensingfor appraisers, because we have
plenty of appraisers who have alicense but not all belong to
(12:19):
ASFMRA.
And I was.
Oh, four months ago.
Five months ago one of myclients brought me a contract.
He had the neighboring placeunder contract 2.5 million and
he said I don't have the moneybut I have to get this place.
You have to figure out, help mefigure out how to fund this.
(12:40):
I have the contract.
Here's the appraisal should bea straightforward deal.
I'm willing to pay 4% on money,help me get this funded.
And I looked at the appraisaland it was cherry-picked comps
to meet the number and it was ajoke.
And I was like no, mr Smith,you're going to make me look
(13:07):
fraudulent by promoting this.
This is a bad appraisal.
This is a guy who you gave himthe number and he went out and
found the comps and theadjustments to make for 10,000.
He charged $10,000, by the way,for a 2.5 million dollar
appraisal.
That should tell you somethingright away.
And I think we've seen more.
(13:29):
I've heard more about thatfinding the comps and
adjustments to meet the numberlately.
What have you seen?
What can you speak to that?
And I mean probably thatmanipulation is probably easier
to do in these specialized,limited niche assets.
(13:50):
I would think.
Megan Sheely (13:53):
Yeah, something appraisers need to be really
careful about, and therecertainly are appraisers out
there who give a bad name to theprofession as a whole and that
there's this impression outthere that you can just pay for
whatever number you want theappraiser to come up with.
But, like you said, if you hirean ethical appraiser that's
(14:19):
being held to a high standard bya society, by something like
ASFMRA, and they do a qualityjob, then the number you're
going to get is a reliable,market-based analysis.
And I don't know what thesolution is to that, but if, for
(14:43):
example, if Crown Appraisals,if we started operating like
that, our opinion is that atsome point we would be sued out
of business so fast that it'snot even worth considering that
as part of our business plan.
So we stand by our numbersbeing highly reputable and
well-supported by marketevidence and even if that means
(15:04):
losing some jobs where somebodythinks that they can come in and
tell us what number it's goingto go on, it's just not worth it
in our operation.
Colter DeVries (15:14):
Tell me about taking the stand.
Do you love going to court andbattling it out with the
attorneys?
Megan Sheely (15:20):
Well, thankfully, I've only had to do it a handful
of times, but you know it'salways a lot of anxiety leading
up to it.
But then, once you're up thereand you if you did a quality job
up front that it's never asscary when you're up there as
you as it seems like when it'sthis monster.
(15:41):
You're just waiting for Like,and then you get it over with
and it wasn't as bad as youexpected and it's always good
experience and there's alwayssomething you can learn from it
too.
Like oh, I could explain thisbetter, I could support this
better.
So, even if it's painful, itmakes us better appraisers, I
think.
Colter DeVries (15:59):
Now Crown appraisals out of Fargo.
You said cotton gin.
I don't know farming.
I would assume there's not alot of cotton in North Dakota.
So you guys must take on casesacross the United States.
Megan Sheely (16:14):
Yep, so.
So a majority of our work is inthe Midwest, but we have
projects all over the US.
Our appraisers hold licenses inI don't know how many states
across the team and then we canget temporary state licenses on
an as needed basis.
But, like I said, most of ourwork is in Midwest.
But last year we had projectsin Alabama, virginia, washington
(16:37):
, new Mexico, texas.
So I mean coast to coast,border to border.
If it's in agribusiness, we'llbe able to take care of it.
Colter DeVries (16:50):
So why do people call you and maybe not someone
else?
They've Googled that came upranking on the search results.
Megan Sheely (17:00):
Sure.
So what sets Crown Appraisalsapart is that we have training
and designations in not onlyreal estate.
We're all certified generalappraisers.
We all either have or areworking on getting our
accredited rural appraisalappraiser designations.
(17:23):
We also have training and somedesignations and machinery
equipment.
And then I mentioned ourappraiser on staff, who has this
CPA and a business valuationdesignation.
So by having all threedisciplines within appraisal it
really allows us to get awell-rounded approach to
appraising these complex,multifaceted facilities that
(17:47):
have all three have real estate,machine equipment and they're
going concerned piece to it.
The reasons people call us canvary a lot.
A majority of our work is formergers and acquisitions.
So either the buyer or theseller will call us when they
(18:08):
are looking at considering adeal as part of like where
should we start?
Negotiations will come in toset a value there.
Sometimes it's after the afterthe sale, so the buyer will call
us to appraise it for theirpurchase price allocation, for
their books and filings anddifferent things.
(18:28):
That's not uncommon.
And then we do a lot of financeprojects.
So if somebody is buying afacility, building a new
facility, expanding a facility,the bank might call us for an
appraisal.
But then we get into otherthings like we do a lot of real
estate appeal work for both thecounty or the property owner,
depending on the situationLitigation.
Colter DeVries (18:51):
Eminent domain.
Megan Sheely (18:53):
Some eminent domain, just all kinds of
reasons Carbon pipelines andtransmission lines.
Colter DeVries (19:01):
I don't know if we've gotten into carbon
pipelines.
Megan Sheely (19:03):
We have done some power line work and a big flood
control project around Fargo andWarhead, but most of our work
is mergers and acquisitions andfinancing.
Colter DeVries (19:16):
So you must be working then.
I know you're not going to giveme any hint otherwise, but that
tells me that you are workingfor the big co-ops.
Those co-ops just keep gettingbigger Mergers and acquisitions
and people think that they'relike these Granger movement.
People think that they're likeoh, it's a co-op, it's great,
(19:38):
it's one share, one vote.
Aren't we all like this happylittle commune?
No, these are Fortune 100companies, these are big
businesses and they're yourclient, aren't they?
Megan Sheely (19:50):
Yeah, we do a fair amount of work for bigger
companies, yes, but thatconsolidation is a lot of what
has made I mean, the whole thingyou're talking about with how
much agribusiness has changed.
Like these are huge companies.
It's our opinion that thatcontinues to drive consolidation
(20:10):
because it's not just myhometown, morton, north Dakota
has its own co-op and the guywho manages it is just handling
that elevator.
Like that doesn't exist verymuch anymore.
There are still some singlelocation co-ops, but I mean now
that it's big business it can bedozens of facilities, it's
(20:32):
grain, it's fertilizer, it'sfeed seed, it's everything and
there just aren't that manypeople out there that have the
capacity to manage somethinglike that.
So you get two competing co-opsand it's hard to get these high
caliber people to move to themiddle of nowhere North Dakota
to manage these co-ops.
(20:52):
So that might be the decidingfactor on why co-ops consider a
merger.
There's all kinds of thingslike that at play with what's
driving.
Colter DeVries (21:03):
They already have the overheads in place.
That incremental, marginalexpansion and maybe it's not
marginal when you absorb anothervery large co-op, but it's
incremental growth and they'vealready got the systems in place
.
I see that I think at CHS theyare expanding to Brazil and I
(21:26):
know that they have hadterminals in the Ukraine.
I want to I don't know ifsomeone needs to call me out,
fact check me.
I want to say they pulled outof the Ukraine just recently due
to what's going on.
But, man, how do you value aterminal in the Ukraine right
now?
Megan Sheely (21:44):
Good question.
We haven't been asked to dothat yet, but I mean there can
always be a first time foreverything, right, but I mean
any facility, whether it's inUkraine or it's in the Gulf, or
it's in the PNW, like it, hasits own set of challenges that
need to be considered from avaluation perspective, and
that's kind of the story that wetry to get to when we're
(22:07):
digging into our analysis.
Colter DeVries (22:10):
What do you get out of ASF?
Megan Sheely (22:12):
and.
Colter DeVries (22:12):
RA, I met you in Nashville, had a great time,
and I just like to show up tothe society.
Those events hang around smartpeople like you, keep my mouth
shut and then just benefit byassociation.
Just say nothing, absorbeverything and just hang out
(22:34):
with smart people.
What do you get out of it?
Megan Sheely (22:36):
That's a really good way to put it.
I mean, the education is great.
From an appraiser's perspective, the appraisal education that
we get at ASF and RA is secondto none, especially if you're
doing anything rural farmland,farm headquarters, agri-business
, it's probably even rural,residential.
(22:57):
It's probably great.
But like you said, moreimportantly, the networking is
by far the most valuable thingthat you can get out of the
society.
For example, as appraisers wework really hard to develop our
network within the society ofother appraisers so that when we
(23:20):
run into a challenge there issomebody within the organization
that has seen it before andthat we can call and have them
walk us through possiblesolutions or ideas or
brainstorming.
And our phone line is alwaysopen for a conversation like
that with another society memberas well.
So just having your network torely upon is invaluable and the
(23:44):
society offers a great way todevelop that for your business.
Colter DeVries (23:50):
Well, I'm going to play devil's advocate here
and give a little pushback onARAs, afms, accredited farm
managers, and AACs accreditedagricultural consultant.
So I had on Fred Hepler and weall know and love Fred right Big
(24:13):
time consultant, long-standingactive member in ASFMRA, and he
was telling about how theseprojects he could take on.
He'd be in Iowa, he'd get acall Big Orchard in California
or Tomatoes, whatever it was,consult on that, go do something
in Japan, go do something inSaudi Arabia.
(24:33):
And that's granted, it'sconsulting, but it is related to
appraising, right, you stillhave to understand the
underlying assets value.
And a caller called me up toexpress his frustration.
He's like what kind of bullshitis this?
If I'm in Iowa and I needsomeone to value my dairy or my
(24:57):
fog facility in Iowa, I don'twant a consultant coming out
from California who's familiarwith the Central Valley crops in
that industry, like I don'twant to pay that guy $400 an
hour to then come sub it out inIowa.
And what's your response tothat?
Megan Sheely (25:19):
I guess everybody has a different way of going
about it and what they.
I mean it depends what you'relooking at, right.
If it's farmland, like, youhave to understand the ins and
outs of that really local market.
If it's a grain elevator, like,what's the market for that
facility?
Is it just the local co-ops orjust the local farmers, or is it
(25:42):
something where you've got likethe ABCD companies of the world
that would consider it?
So I think that's a lot oftimes the basis of where you can
go geographically and whatmarkets you can look at.
Colter DeVries (25:58):
Well, that grain elevator, I guess we're going
to get specific now coming upwith comps and sales and the
capitalization method, which I'mnot the appraiser.
I just have my five cents aboutyour work when it hangs up my
deal Okay.
Megan Sheely (26:18):
They don't take it on me.
I've never hung up your deals,Coulter.
Colter DeVries (26:22):
Is it replicable ?
Is it repeatable?
Right, isn't that a test?
And like I think you couldcompare a grain elevator in
Montana, even though the servicearea is usually 120 miles, the
only market for 100 miles, forsure, in a lot of places.
And then you get to your areaand it's the only market for 30
(26:44):
miles or 15.
And in Iowa it's like eightmiles.
Megan Sheely (26:50):
So you're asking, like where you would look for
comps for something like that.
Colter DeVries (26:55):
I'm saying you could be an appraiser of grain
elevators in Iowa and probablystill have an adequate
understanding of grain elevatorsin Montana.
Right, yeah, and then you couldvalue it on that market area, I
would think.
Megan Sheely (27:13):
Yeah.
So I mean in a perfect world ofcourse you would have a sale of
a grain elevator an hour downthe road that's similar in size
and operation and capacities andeverything else.
But I mean that you can imaginehow often that happens where
you have a sale that good.
So you just have to understandwhat impacts that area
(27:37):
specifically with how thatfacility operates.
Are they selling to the river?
Are they selling to ethanol andcrush plants nearby?
Are they shipping it out to thePNW?
And that plays an importantfactor into like what kind of
comparable sales you're using,how you're looking at it as far
as who the market is for afacility like that.
(27:59):
Is it something where it's anold elevator and it's getting
too expensive to man and tooexpensive to ensure and the best
market for it would be sellingit to a local farmer and just
discontinuing commercialoperation?
Then you're probably looking atlike more tight local
(28:20):
comparable sales of farmheadquarters or whatever.
But if it's something wherethese big companies from all of
these big ABCD companies arelooking at it, you probably can
use elevator sales scattered allover the place because they're
looking at all of those as partof their network of facilities.
Colter DeVries (28:40):
What do you get out of being an appraiser?
Megan Sheely (28:43):
I guess for our role specifically like, it's
just super gratifying to be apart of the process when a
company is going through mergeror an acquisition, like, for
example, I appraised a littlemom and pop feed mill in South
Dakota a couple years ago and Ishowed up at 8am.
(29:08):
Their house was located righton the same site and we met at
their kitchen table and they Iwill never forget it they
offered me a spam and tomatosandwich if I wanted to have a
sandwich with them for breakfast.
I had already had breakfast butI still regret not trying it but
we sat down and just talkedabout the history of their
(29:30):
facility and what it meant tothem and how they would like to
sell it to retire.
Well, I called them back acouple of times over the years
and finally I called them backlast year and they had sold the
facility and it was just likeeverything just worked out
perfectly and he was superthankful for the role that we
played in giving him the numbersand analysis that he could use
(29:51):
to start negotiations with hisbuyer.
That was probably the mostgratifying project I've ever had
, because I just know that Ihelped them professionally and
personally just come to asolution.
So situations like that justreally, really stick with you
and make it all worth it.
(30:11):
Despite all of the work andhead scratching and market
research that goes into it, it'sjust, it's really fun.
Colter DeVries (30:20):
Knowing that you played an integral role added
tremendous value to someone'slife.
They have their entire legacywrapped up in that mill.
It provided their family a lifefor two generations probably,
and their entire wealth wasprobably in that elevator mill.
(30:44):
And knowing that you helpedthem move probably the biggest
event of their life you addedvalue to that.
That's got to be immenselygratifying.
Ad (30:57):
Yep yeah, that one will.
Colter DeVries (30:59):
The feelings you have around helping someone to
that level has just got to bevery rewarding.
Megan Sheely (31:05):
Yep, I'll remember that one forever.
It was just a perfect scenariofor everybody.
Colter DeVries (31:10):
Why do you love sugar projects?
Megan Sheely (31:14):
Well, like I said earlier, I grew up on a sugar
beet farm and growing up my dadwas super involved in our, the
board of directors for our localsugar co-op.
So I grew up like our familyvacation every year was going to
the big sweetener symposium andgoing to these beautiful places
(31:34):
and seeing all the growers fromacross the country, and that
was just really fun.
Well, now that I do what I doprofessionally, a lot of our we
occasionally get the opportunityto appraise sugar beet
factories, sugar cane crushmills and sugar refineries, and
so in the summers I attend thesugar meetings that I used to go
(31:59):
to growing up, so I'll see thesame people that I've known for
my whole life and they're like,well, weren't you just here and
you were like this tall, and nowyou're here passing out
business cards.
So that's super fun.
And then when we get theopportunity to appraise those
facilities, I think just becauseI grew up on the sugar beet
(32:19):
farm and I was involved as kindof like an advocate for the
sugar beet industry, it kind ofgives me a unique perspective
and a deep understanding of howthe sugar industry works and
sugar policy and how it's allvery important as it pertains to
like valuation.
So anytime we get involved insugar it's just super fun
(32:41):
because it just feels like Imean it feels like family kind
of that sounds really corny, butit's just.
It's a small industry,everybody knows everybody.
So when I get the opportunityto help out anything involved in
sugar it's just reallygratifying.
Colter DeVries (32:56):
Well, absolutely those are.
Those are your people, that'syour squad.
You all share the samestruggles and maybe even have a
lot of the same legacy.
I don't know about your area,but around here the sugar
farmers are still largely whiteRussians, Volga Germans, so
(33:19):
Russian born Germans, whoimmigrated here when the Tsar
was going to force them to fighton behalf of the Russian Empire
.
First, that was the first waveof white Russian immigrants here
.
They became sugar beaters inMontana and Windsor Colorado is
another big area and then, whenthe Bolshevik revolution
(33:44):
happened, their land in theVolga was going to be seized.
So we we have a huge Germanheritage community.
I don't know about you guys do,but you have a lot in common.
You're cooking.
A lot of these families camefrom the same valley in Russia,
Siberia.
They, they, they fled the samestruggles and they still have
(34:04):
those stories and thosetraditions.
How about up there?
Is it white Russians?
Megan Sheely (34:12):
A lot of Scandinavians and Germans but
yeah, it's a similar story.
It's very generational.
People are very proud of theirgenerations of family being
involved in the sugar businessand continuing to be
shareholders with whatever co-opthey're associated with.
(34:33):
Yeah, it's super important.
It's super important wherewe're at in the Red River Valley
of North Dakota, Minnesota.
If the sugar beet farmers aredoing well, everybody does well,
essentially.
Colter DeVries (34:46):
Well, that is North Dakota, Minnesota to a T,
the Lutheran Scandinavians theydo.
The co-ops, they broughtcommunism in the form of co-ops,
farmers Union, that's totallythe Scandinavian communal thing
(35:07):
that has lasted generations?
Absolutely that.
Blonde-haired, blue-eyed, thecliche stereotype that's unique
to your area for sure.
My maternal grandmother was bornin America, so first-generation
American.
(35:27):
Her family fled the Bolsheviks,the communists Part of the
reason why I'm just it's in myblood to hate communists.
But when they came over theGermans, they had nothing.
They would put three familiesin a dirt floor cabin and hoe
(35:49):
beets.
Then they'd get each family alittle piece of land along the
way and they'd keep trying togrow from there.
Well, my grandmother was one of13 and literally dirt-poored
Germans, because they're nofloor, they're dirt floors.
As one of 13,.
The old joke is that afterchild number nine her mother
(36:16):
quit going in to deliver thechildren.
She'd just squat in the field,deliver the child there and
continue hoeing beets.
Megan Sheely (36:25):
That paints quite a picture.
Colter DeVries (36:30):
Actually, one year for Mother's Day, I thought
I was going to be all trendyand hipster and make my
grandmother a nice meal, and mymom.
I bought some lamb.
Lamb is a delicacy.
I was like, okay, I'm going tomake lamb sliders with some form
(36:55):
of hipster crumble white cheeseor something.
Yeah, some form of arugula andwhite cheese.
I don't know something fancierthan American craft cheese,
craft singles.
I made these sliders and mygrandma took the first bite.
(37:16):
Her eyes just got huge and shespit it out in front of me and
she was really embarrassed aboutthat.
She ran off crying.
When she came back she said I'msorry, I didn't mean to insult
you like that.
I appreciate your efforts here,your consideration, but when I
(37:40):
was a kid we were so poor thatneighboring ranchers would give
us mutton.
All I ate was mutton as a kid.
To this day I can't eat sheep.
I didn't know that.
Those are the kinds of things.
Megan Sheely (37:56):
It's like how do you get your grandparents to
tell those stories?
Absolutely, because that's whatit'll just be lost.
Colter DeVries (38:05):
Yeah, that's one of the beauties of agriculture
is you have a lot of legacy andheritage coming down from those
generations.
As you mentioned your sugarbeater network.
Megan Sheely (38:21):
Yeah, for sure.
I think that's just agricultureas a whole.
Everybody's for the most partvery proud of where they came
from and proud to carry that on,Even though I'm not on our
family farm or very involved inthat, just to be involved in
(38:42):
agriculture it just means a lotto me.
Colter DeVries (38:46):
All right, I see .
Can you tell me when you getinto these M&A deals, do your
clients ever ask you to helpthem market their facilities?
Megan Sheely (38:58):
Just because of the kind of unique position we
have in the industry, wherewe're working with clients that
are considering sales or mergersand then we also have clients
that are looking at how to growtheir companies, we occasionally
have the opportunity to kind ofconnect the dots and put buyers
(39:19):
in contact with sellers or viceversa.
Now, we always have to be supercareful with that, to not to
always be super respectful ofconfidentiality, and we
certainly aren't brokers.
But it's really a fun part ofthe business to occasionally
kind of play matchmaker and helpfacilitate a connection and
bring our network together tosee what kind of opportunities
(39:40):
we can create for our clients.
Colter DeVries (39:43):
Like farmers only, but on a more
commercialized level.
What are you looking forward towithin the farm finance and
appraisal industry?
Megan Sheely (39:53):
You know, going forward, I think there's going
to continue to be.
I mean, it's no questionthere's going to continue to be
challenges and ups and downswithin our industry, but every
time one of those challenges orhurdles comes about, there's
going to be new ideas andinnovations sparked out of that.
So I think one of the most funparts about our role within the
(40:15):
industry as crown appraisals isthat we are on the inside track
when our clients are looking atthose different ideas and
opportunities.
So I'm just super excited tocontinue to learn and understand
about those innovations thatare on the forefront and help
our customers identify the valuethat's associated with those
opportunities.
Colter DeVries (40:35):
Well, I did before we go.
I did want to say I was talkingto Andy Ron Montana land source
.
Often he's a co-host, he's theoutgoing president of Montana's
chapter of ASFMRA and Imentioned that you were coming
up on the podcast and he saidthat's very impressive that you
(40:57):
are an ARA at 27, I believe, andso he was.
He sends his kudos.
He thought that that was veryimpressive, what you have
accomplished.
Megan Sheely (41:06):
Wow Well, thank you.
Colter DeVries (41:09):
Yeah, and maybe it.
Maybe other young professionalscan reach out to you for
questions about how you got yourstart and what it takes to
become an appraiser.
Megan Sheely (41:22):
Yeah, definitely happy to serve as a resource,
Whether it be within theappraisal industry or
agribusiness as a whole.
Like would love to visit withanybody interested in talking.
Colter DeVries (41:34):
Well, thanks for coming on the podcast.
It's been enjoyable.
Megan Sheely (41:38):
Yeah, thanks, Colter.
Colter DeVries (41:39):
They warm in Fargo you as well.
Megan Sheely (41:43):
Enjoy the rest of winter.
Colter DeVries (41:45):
And thanks everyone for tuning into the
Ranch Investor podcast.
We at Ranch Investor are veryinterested in hearing your
thoughts, your opinion, yourwants, desires, hopes and dreams
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Welcome to the Ranch Investor Podcast.
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Colter DeVries (00:35):
Megan Shealy thanks for coming on the Ranch
Investor Podcast.
Megan Sheely (00:40):
Thanks for having me Colter.
Colter DeVries (00:42):
Megan and I met at ASFMRA American Society of
Farm Managers and RuralAppraisers.
She is a accredited ruralappraiser with crown appraisals
out of Fargo North Dakota.
A seven-year veteran, megan,let's get started.
Simple introduction Tell me alittle bit about your background
(01:05):
, sure so.
Megan Sheely (01:07):
I grew up on a corn, soybean and sugar beet
farm about an hour south ofFargo in the southeast corner of
North Dakota.
I was involved on the farm butreally took it for granted and
didn't really know what I wantedto do.
When I grew up, went to NDSU inFargo and hopped around a few
(01:29):
different departments beforekind of finding my home in the
Ag Econ department.
The whole time my family wastelling me, like just go into
agriculture, you're gonna loveit.
The whole time I was digging inmy 19-year-old stubborn heels
like absolutely not, I don'twant anything to do with the
farm, I'm gonna forge my ownpath.
(01:49):
But ended up getting into theAg Econ department and it was
really the people there thatjust felt like home and it ended
up being a great experience anda great education.
Towards the end of my collegecareer I had the fear of what am
I gonna do when I get out ofhere?
And I had an academic advisorwho I sat down with and he said
(02:11):
you know, you're a lot like me,you like talking to people, but
you're definitely a nerd, so Ithink you'd make a pretty good
appraiser.
Have you ever thought aboutthat?
And so, because he said that'swhat he would do if he wasn't in
academics.
So I didn't even know how tospell appraisal at that point,
not let alone know what they door if it was something I wanted
(02:32):
to get into.
So I called around forinternships and, luckily, crown
appraisals.
Let me come in and serve aninternship for a summer before I
graduated and at that time JeffBerg, the founder of our
company.
He had a new project thatsummer.
He was asked to appraise acotton gin and it was the first
time he'd ever appraised acotton gin.
(02:53):
So he set me out as an internto go research the cotton
industry.
So I got busy doing that and itwas kind of an aha moment for
me because I thought you know,if he's 30 plus years into his
career and he's still doingthings for the first time and
still learning, like this issomething I could get into.
(03:13):
And then I was hired full-timeafter I graduated and have been
there seven years since then andhave since become a partner in
the operation.
And what I thought that summerhas proven to be true Like we're
learning new things every day,every operation we look at is
different and interesting andfun.
So just real, I just feelreally fortunate to to be here
(03:35):
and have this opportunity.
So at Crown Appraisals weappraise agribusiness facilities
.
So that could be grainelevators, fertilizer, negronomy
facilities, seed plants, feedmills, things like that, and
then some more specializedfacilities like sugar beet and
sugar cane facilities, biofuelplants, rice mills, flour mills,
(03:58):
pretty much anything specialtyagribusiness is kind of our, our
specialty.
Colter DeVries (04:03):
Well, that must for the right person.
That must be tremendouslyrewarding.
New challenges all the time.
Very nuanced assets, not a hugemarket for a sugar beet factory
.
That seems like it'd be verychallenging and you get to learn
something new every day.
(04:24):
Try figuring out that marketand applying the science,
appraisal science there.
I would assume what goes intothat.
Are you looking at these assetscost capitalization, comp,
value how do you?
How do you value a sugar beetplant?
Megan Sheely (04:45):
Sure, so everything we do is based on
comparable sales of similarfacilities.
So, even if, even if the themarket is thinly traded and
there are very few sales, salesdo exist.
They have happened and we do ourbest to track those sales down
which presents its own sets ofchallenges, because when you get
(05:07):
these very complex facilitiesand something sells, the county
courthouse usually doesn't havethe full story of what happened
in that sale.
So it it ends up being we arerelying on our network and we're
trying doing our best to trackdown the buyers and sellers and
getting out of them the fullstory of what happened with that
sale.
So everything we do is based oncomparable sales.
(05:30):
We look at it from the costapproach method so what would
this facility cost to build newtoday?
And then we're applyingdepreciation rates based on
depreciation rates that we areabstracting from other
comparable sales.
And then we're looking at thesales comparison approach.
So what have other similarfacilities sold for on a per
(05:50):
unit basis, whether it's perbushel, per ton, per hundred
weight of sugar, whatever therelevant unit is for that
industry.
And the cost and salescomparison approaches give us a
good, a good bricks and mortarvalue of what the facility
itself is worth, what's the land, buildings and equipment worth?
And then we also look at theincome approach and we take we
(06:15):
take the, the operations,historic, owner, operator
financials, we dig deep intothose with the CFO or the
manager or the owner, whoeverthe right person is to really
get an understanding of whatmakes this business tick.
Why are they profitable?
What are the challenges?
We analyze those historicfinancials and we'll either
(06:37):
we'll capitalize it based on caprates that we're abstracting
from those comparableagribusiness sales, and then we
also have a database of EBITDAmultipliers that we'll use.
And so wherever that incomeapproach value comes in relative
to the cost and salescomparison approaches, sometimes
it's less and that might tellus that you know this operation
(06:58):
isn't very profitable.
Therefore it might sell at adiscount relative to the bricks
and mortar value.
Sometimes it comes in reallyclose to those other two values,
which just tells us like thegoing concern operation supports
the bricks and mortar value andthen on occasion we'll see it
come in above that bricks andmortar value, which gives us an
indication that you know there'ssome kind of intangible asset
(07:21):
or blue sky at play here.
Now we aren't full-blownbusiness valuation appraisers so
we can't get into the differentcomponents of intangible assets
, but we do have a network ofbusiness valuation appraisers
that we would work with if aclient needed that.
But it's still a reallypowerful tool to when you're
(07:42):
looking at these facilities thatsell with a going concern
business.
That's the quick and dirtyversion of our extensive
analysis that we would do on acomplex facility.
Colter DeVries (07:56):
These complex facilities, niche businesses.
There is a certain amount, ofcourse, Blue Sky going into that
valuation.
I'm glad to hear that us ranchbrokers are not the only ones
accused of selling Blue Sky.
It's everywhere.
(08:17):
Well, how do you I mean, you'regoing to have to go through that
again how do you narrow downwhat is bullshit and what is
actual, because I mean thesefacilities?
I don't know what a cotton gingoes for, but I would assume a
dairy, an organic dairy, or youprobably deal with a lot of
(08:40):
co-ops, mega big co-ops, thathave their grain handling,
processing facilities.
There's a lot of money on theline there and we're going to
try to pad our numbers as muchas possible.
How do you sift the chaff fromthe grain and filter out the
bullshit?
(09:01):
Yeah, that's a challenge, forsure, then stay confident to
your numbers because I know youappraisers get taken to court a
lot.
Megan, you were just testifyingrecently as an expert witness,
weren't you?
Yes, that's always a funexperience, so you have to
defend your study all the timeand you have to conduct it
(09:23):
understanding that you might endup on the stand.
Megan Sheely (09:27):
Yeah, yeah, a lot, yeah.
So you have to do all of thedue diligence to make sure your
numbers are as reliable aspossible.
Yeah, when it comes tofinancials there's always a
certain degree of that.
You walk into a facility andyou could just tell by the
language that the manager orowner is using what kind of
number they want.
But thankfully we are veryethical in that it doesn't
(09:50):
matter who's paying for theappraisal or what the purpose is
.
Our number is our number.
But it is important when we'relooking at those financials,
trying to figure out howreliable are these numbers and
how reliable are they goingforward.
So say you have a Niagarabusiness facility that's looking
to sell.
There's a certain degree ofstrategy that they can use to
(10:15):
pad those numbers for a fewyears prior to potential sale,
like they could cut back onmaintenance into the facilities.
They could take out half theirstaff, whatever it is.
But you can only do that for solong before the wheels fall off
figuratively or literally, Iguess.
Colter DeVries (10:35):
If equipment starts falling apart.
Like a ranch starving your cowinto profitability.
Megan Sheely (10:40):
Yeah, yep, but you can only do that for so long
before it really wouldnegatively impact value.
And I mean that's just part ofthe process when we're
interviewing the manager or theCFO.
It's just getting to the bottomof what's included in those
numbers.
And thankfully, one of ourappraisers on our team he's a
(11:05):
accredited rural appraiser, he'sa partner here and he's also a
CPA with a business evaluationdesignation, so he has a really
unique skill set that allows usto really dive deep into those
financials and understand thenumbers and where they're coming
from.
So it really gives us a goodperspective and a good base to
(11:27):
rely on him when we're diggingdeep into some of those numbers.
Colter DeVries (11:31):
We bring up something that came to mind a
few times lately.
In particular yesterday we weretalking about appraisals and
buyer sellers the neighboringfarmer with five cents five
cents of opinion on the matter.
It to me as a broker, it isvery important to work with ARAs
(11:55):
, accredited rural appraisersthrough the ASFMRA, because
there's a form of accountabilitythere.
You guys hold each otheraccountable to higher standards
than just the state licensingfor appraisers, because we have
plenty of appraisers who have alicense but not all belong to
(12:19):
ASFMRA.
And I was.
Oh, four months ago.
Five months ago one of myclients brought me a contract.
He had the neighboring placeunder contract 2.5 million and
he said I don't have the moneybut I have to get this place.
You have to figure out, help mefigure out how to fund this.
(12:40):
I have the contract.
Here's the appraisal should bea straightforward deal.
I'm willing to pay 4% on money,help me get this funded.
And I looked at the appraisaland it was cherry-picked comps
to meet the number and it was ajoke.
And I was like no, mr Smith,you're going to make me look
(13:07):
fraudulent by promoting this.
This is a bad appraisal.
This is a guy who you gave himthe number and he went out and
found the comps and theadjustments to make for 10,000.
He charged $10,000, by the way,for a 2.5 million dollar
appraisal.
That should tell you somethingright away.
And I think we've seen more.
(13:29):
I've heard more about thatfinding the comps and
adjustments to meet the numberlately.
What have you seen?
What can you speak to that?
And I mean probably thatmanipulation is probably easier
to do in these specialized,limited niche assets.
(13:50):
I would think.
Megan Sheely (13:53):
Yeah, something appraisers need to be really
careful about, and therecertainly are appraisers out
there who give a bad name to theprofession as a whole and that
there's this impression outthere that you can just pay for
whatever number you want theappraiser to come up with.
But, like you said, if you hirean ethical appraiser that's
(14:19):
being held to a high standard bya society, by something like
ASFMRA, and they do a qualityjob, then the number you're
going to get is a reliable,market-based analysis.
And I don't know what thesolution is to that, but if, for
(14:43):
example, if Crown Appraisals,if we started operating like
that, our opinion is that atsome point we would be sued out
of business so fast that it'snot even worth considering that
as part of our business plan.
So we stand by our numbersbeing highly reputable and
well-supported by marketevidence and even if that means
(15:04):
losing some jobs where somebodythinks that they can come in and
tell us what number it's goingto go on, it's just not worth it
in our operation.
Colter DeVries (15:14):
Tell me about taking the stand.
Do you love going to court andbattling it out with the
attorneys?
Megan Sheely (15:20):
Well, thankfully, I've only had to do it a handful
of times, but you know it'salways a lot of anxiety leading
up to it.
But then, once you're up thereand you if you did a quality job
up front that it's never asscary when you're up there as
you as it seems like when it'sthis monster.
(15:41):
You're just waiting for Like,and then you get it over with
and it wasn't as bad as youexpected and it's always good
experience and there's alwayssomething you can learn from it
too.
Like oh, I could explain thisbetter, I could support this
better.
So, even if it's painful, itmakes us better appraisers, I
think.
Colter DeVries (15:59):
Now Crown appraisals out of Fargo.
You said cotton gin.
I don't know farming.
I would assume there's not alot of cotton in North Dakota.
So you guys must take on casesacross the United States.
Megan Sheely (16:14):
Yep, so.
So a majority of our work is inthe Midwest, but we have
projects all over the US.
Our appraisers hold licenses inI don't know how many states
across the team and then we canget temporary state licenses on
an as needed basis.
But, like I said, most of ourwork is in Midwest.
But last year we had projectsin Alabama, virginia, washington
(16:37):
, new Mexico, texas.
So I mean coast to coast,border to border.
If it's in agribusiness, we'llbe able to take care of it.
Colter DeVries (16:50):
So why do people call you and maybe not someone
else?
They've Googled that came upranking on the search results.
Megan Sheely (17:00):
Sure.
So what sets Crown Appraisalsapart is that we have training
and designations in not onlyreal estate.
We're all certified generalappraisers.
We all either have or areworking on getting our
accredited rural appraisalappraiser designations.
(17:23):
We also have training and somedesignations and machinery
equipment.
And then I mentioned ourappraiser on staff, who has this
CPA and a business valuationdesignation.
So by having all threedisciplines within appraisal it
really allows us to get awell-rounded approach to
appraising these complex,multifaceted facilities that
(17:47):
have all three have real estate,machine equipment and they're
going concerned piece to it.
The reasons people call us canvary a lot.
A majority of our work is formergers and acquisitions.
So either the buyer or theseller will call us when they
(18:08):
are looking at considering adeal as part of like where
should we start?
Negotiations will come in toset a value there.
Sometimes it's after the afterthe sale, so the buyer will call
us to appraise it for theirpurchase price allocation, for
their books and filings anddifferent things.
(18:28):
That's not uncommon.
And then we do a lot of financeprojects.
So if somebody is buying afacility, building a new
facility, expanding a facility,the bank might call us for an
appraisal.
But then we get into otherthings like we do a lot of real
estate appeal work for both thecounty or the property owner,
depending on the situationLitigation.
Colter DeVries (18:51):
Eminent domain.
Megan Sheely (18:53):
Some eminent domain, just all kinds of
reasons Carbon pipelines andtransmission lines.
Colter DeVries (19:01):
I don't know if we've gotten into carbon
pipelines.
Megan Sheely (19:03):
We have done some power line work and a big flood
control project around Fargo andWarhead, but most of our work
is mergers and acquisitions andfinancing.
Colter DeVries (19:16):
So you must be working then.
I know you're not going to giveme any hint otherwise, but that
tells me that you are workingfor the big co-ops.
Those co-ops just keep gettingbigger Mergers and acquisitions
and people think that they'relike these Granger movement.
People think that they're likeoh, it's a co-op, it's great,
(19:38):
it's one share, one vote.
Aren't we all like this happylittle commune?
No, these are Fortune 100companies, these are big
businesses and they're yourclient, aren't they?
Megan Sheely (19:50):
Yeah, we do a fair amount of work for bigger
companies, yes, but thatconsolidation is a lot of what
has made I mean, the whole thingyou're talking about with how
much agribusiness has changed.
Like these are huge companies.
It's our opinion that thatcontinues to drive consolidation
(20:10):
because it's not just myhometown, morton, north Dakota
has its own co-op and the guywho manages it is just handling
that elevator.
Like that doesn't exist verymuch anymore.
There are still some singlelocation co-ops, but I mean now
that it's big business it can bedozens of facilities, it's
(20:32):
grain, it's fertilizer, it'sfeed seed, it's everything and
there just aren't that manypeople out there that have the
capacity to manage somethinglike that.
So you get two competing co-opsand it's hard to get these high
caliber people to move to themiddle of nowhere North Dakota
to manage these co-ops.
(20:52):
So that might be the decidingfactor on why co-ops consider a
merger.
There's all kinds of thingslike that at play with what's
driving.
Colter DeVries (21:03):
They already have the overheads in place.
That incremental, marginalexpansion and maybe it's not
marginal when you absorb anothervery large co-op, but it's
incremental growth and they'vealready got the systems in place
.
I see that I think at CHS theyare expanding to Brazil and I
(21:26):
know that they have hadterminals in the Ukraine.
I want to I don't know ifsomeone needs to call me out,
fact check me.
I want to say they pulled outof the Ukraine just recently due
to what's going on.
But, man, how do you value aterminal in the Ukraine right
now?
Megan Sheely (21:44):
Good question.
We haven't been asked to dothat yet, but I mean there can
always be a first time foreverything, right, but I mean
any facility, whether it's inUkraine or it's in the Gulf, or
it's in the PNW, like it, hasits own set of challenges that
need to be considered from avaluation perspective, and
that's kind of the story that wetry to get to when we're
(22:07):
digging into our analysis.
Colter DeVries (22:10):
What do you get out of ASF?
Megan Sheely (22:12):
and.
Colter DeVries (22:12):
RA, I met you in Nashville, had a great time,
and I just like to show up tothe society.
Those events hang around smartpeople like you, keep my mouth
shut and then just benefit byassociation.
Just say nothing, absorbeverything and just hang out
(22:34):
with smart people.
What do you get out of it?
Megan Sheely (22:36):
That's a really good way to put it.
I mean, the education is great.
From an appraiser's perspective, the appraisal education that
we get at ASF and RA is secondto none, especially if you're
doing anything rural farmland,farm headquarters, agri-business
, it's probably even rural,residential.
(22:57):
It's probably great.
But like you said, moreimportantly, the networking is
by far the most valuable thingthat you can get out of the
society.
For example, as appraisers wework really hard to develop our
network within the society ofother appraisers so that when we
(23:20):
run into a challenge there issomebody within the organization
that has seen it before andthat we can call and have them
walk us through possiblesolutions or ideas or
brainstorming.
And our phone line is alwaysopen for a conversation like
that with another society memberas well.
So just having your network torely upon is invaluable and the
(23:44):
society offers a great way todevelop that for your business.
Colter DeVries (23:50):
Well, I'm going to play devil's advocate here
and give a little pushback onARAs, afms, accredited farm
managers, and AACs accreditedagricultural consultant.
So I had on Fred Hepler and weall know and love Fred right Big
(24:13):
time consultant, long-standingactive member in ASFMRA, and he
was telling about how theseprojects he could take on.
He'd be in Iowa, he'd get acall Big Orchard in California
or Tomatoes, whatever it was,consult on that, go do something
in Japan, go do something inSaudi Arabia.
(24:33):
And that's granted, it'sconsulting, but it is related to
appraising, right, you stillhave to understand the
underlying assets value.
And a caller called me up toexpress his frustration.
He's like what kind of bullshitis this?
If I'm in Iowa and I needsomeone to value my dairy or my
(24:57):
fog facility in Iowa, I don'twant a consultant coming out
from California who's familiarwith the Central Valley crops in
that industry, like I don'twant to pay that guy $400 an
hour to then come sub it out inIowa.
And what's your response tothat?
Megan Sheely (25:19):
I guess everybody has a different way of going
about it and what they.
I mean it depends what you'relooking at, right.
If it's farmland, like, youhave to understand the ins and
outs of that really local market.
If it's a grain elevator, like,what's the market for that
facility?
Is it just the local co-ops orjust the local farmers, or is it
(25:42):
something where you've got likethe ABCD companies of the world
that would consider it?
So I think that's a lot oftimes the basis of where you can
go geographically and whatmarkets you can look at.
Colter DeVries (25:58):
Well, that grain elevator, I guess we're going
to get specific now coming upwith comps and sales and the
capitalization method, which I'mnot the appraiser.
I just have my five cents aboutyour work when it hangs up my
deal Okay.
Megan Sheely (26:18):
They don't take it on me.
I've never hung up your deals,Coulter.
Colter DeVries (26:22):
Is it replicable ?
Is it repeatable?
Right, isn't that a test?
And like I think you couldcompare a grain elevator in
Montana, even though the servicearea is usually 120 miles, the
only market for 100 miles, forsure, in a lot of places.
And then you get to your areaand it's the only market for 30
(26:44):
miles or 15.
And in Iowa it's like eightmiles.
Megan Sheely (26:50):
So you're asking, like where you would look for
comps for something like that.
Colter DeVries (26:55):
I'm saying you could be an appraiser of grain
elevators in Iowa and probablystill have an adequate
understanding of grain elevatorsin Montana.
Right, yeah, and then you couldvalue it on that market area, I
would think.
Megan Sheely (27:13):
Yeah.
So I mean in a perfect world ofcourse you would have a sale of
a grain elevator an hour downthe road that's similar in size
and operation and capacities andeverything else.
But I mean that you can imaginehow often that happens where
you have a sale that good.
So you just have to understandwhat impacts that area
(27:37):
specifically with how thatfacility operates.
Are they selling to the river?
Are they selling to ethanol andcrush plants nearby?
Are they shipping it out to thePNW?
And that plays an importantfactor into like what kind of
comparable sales you're using,how you're looking at it as far
as who the market is for afacility like that.
(27:59):
Is it something where it's anold elevator and it's getting
too expensive to man and tooexpensive to ensure and the best
market for it would be sellingit to a local farmer and just
discontinuing commercialoperation?
Then you're probably looking atlike more tight local
(28:20):
comparable sales of farmheadquarters or whatever.
But if it's something wherethese big companies from all of
these big ABCD companies arelooking at it, you probably can
use elevator sales scattered allover the place because they're
looking at all of those as partof their network of facilities.
Colter DeVries (28:40):
What do you get out of being an appraiser?
Megan Sheely (28:43):
I guess for our role specifically like, it's
just super gratifying to be apart of the process when a
company is going through mergeror an acquisition, like, for
example, I appraised a littlemom and pop feed mill in South
Dakota a couple years ago and Ishowed up at 8am.
(29:08):
Their house was located righton the same site and we met at
their kitchen table and they Iwill never forget it they
offered me a spam and tomatosandwich if I wanted to have a
sandwich with them for breakfast.
I had already had breakfast butI still regret not trying it but
we sat down and just talkedabout the history of their
(29:30):
facility and what it meant tothem and how they would like to
sell it to retire.
Well, I called them back acouple of times over the years
and finally I called them backlast year and they had sold the
facility and it was just likeeverything just worked out
perfectly and he was superthankful for the role that we
played in giving him the numbersand analysis that he could use
(29:51):
to start negotiations with hisbuyer.
That was probably the mostgratifying project I've ever had
, because I just know that Ihelped them professionally and
personally just come to asolution.
So situations like that justreally, really stick with you
and make it all worth it.
(30:11):
Despite all of the work andhead scratching and market
research that goes into it, it'sjust, it's really fun.
Colter DeVries (30:20):
Knowing that you played an integral role added
tremendous value to someone'slife.
They have their entire legacywrapped up in that mill.
It provided their family a lifefor two generations probably,
and their entire wealth wasprobably in that elevator mill.
(30:44):
And knowing that you helpedthem move probably the biggest
event of their life you addedvalue to that.
That's got to be immenselygratifying.
Ad (30:57):
Yep yeah, that one will.
Colter DeVries (30:59):
The feelings you have around helping someone to
that level has just got to bevery rewarding.
Megan Sheely (31:05):
Yep, I'll remember that one forever.
It was just a perfect scenariofor everybody.
Colter DeVries (31:10):
Why do you love sugar projects?
Megan Sheely (31:14):
Well, like I said earlier, I grew up on a sugar
beet farm and growing up my dadwas super involved in our, the
board of directors for our localsugar co-op.
So I grew up like our familyvacation every year was going to
the big sweetener symposium andgoing to these beautiful places
(31:34):
and seeing all the growers fromacross the country, and that
was just really fun.
Well, now that I do what I doprofessionally, a lot of our we
occasionally get the opportunityto appraise sugar beet
factories, sugar cane crushmills and sugar refineries, and
so in the summers I attend thesugar meetings that I used to go
(31:59):
to growing up, so I'll see thesame people that I've known for
my whole life and they're like,well, weren't you just here and
you were like this tall, and nowyou're here passing out
business cards.
So that's super fun.
And then when we get theopportunity to appraise those
facilities, I think just becauseI grew up on the sugar beet
(32:19):
farm and I was involved as kindof like an advocate for the
sugar beet industry, it kind ofgives me a unique perspective
and a deep understanding of howthe sugar industry works and
sugar policy and how it's allvery important as it pertains to
like valuation.
So anytime we get involved insugar it's just super fun
(32:41):
because it just feels like Imean it feels like family kind
of that sounds really corny, butit's just.
It's a small industry,everybody knows everybody.
So when I get the opportunityto help out anything involved in
sugar it's just reallygratifying.
Colter DeVries (32:56):
Well, absolutely those are.
Those are your people, that'syour squad.
You all share the samestruggles and maybe even have a
lot of the same legacy.
I don't know about your area,but around here the sugar
farmers are still largely whiteRussians, Volga Germans, so
(33:19):
Russian born Germans, whoimmigrated here when the Tsar
was going to force them to fighton behalf of the Russian Empire
.
First, that was the first waveof white Russian immigrants here
.
They became sugar beaters inMontana and Windsor Colorado is
another big area and then, whenthe Bolshevik revolution
(33:44):
happened, their land in theVolga was going to be seized.
So we we have a huge Germanheritage community.
I don't know about you guys do,but you have a lot in common.
You're cooking.
A lot of these families camefrom the same valley in Russia,
Siberia.
They, they, they fled the samestruggles and they still have
(34:04):
those stories and thosetraditions.
How about up there?
Is it white Russians?
Megan Sheely (34:12):
A lot of Scandinavians and Germans but
yeah, it's a similar story.
It's very generational.
People are very proud of theirgenerations of family being
involved in the sugar businessand continuing to be
shareholders with whatever co-opthey're associated with.
(34:33):
Yeah, it's super important.
It's super important wherewe're at in the Red River Valley
of North Dakota, Minnesota.
If the sugar beet farmers aredoing well, everybody does well,
essentially.
Colter DeVries (34:46):
Well, that is North Dakota, Minnesota to a T,
the Lutheran Scandinavians theydo.
The co-ops, they broughtcommunism in the form of co-ops,
farmers Union, that's totallythe Scandinavian communal thing
(35:07):
that has lasted generations?
Absolutely that.
Blonde-haired, blue-eyed, thecliche stereotype that's unique
to your area for sure.
My maternal grandmother was bornin America, so first-generation
American.
(35:27):
Her family fled the Bolsheviks,the communists Part of the
reason why I'm just it's in myblood to hate communists.
But when they came over theGermans, they had nothing.
They would put three familiesin a dirt floor cabin and hoe
(35:49):
beets.
Then they'd get each family alittle piece of land along the
way and they'd keep trying togrow from there.
Well, my grandmother was one of13 and literally dirt-poored
Germans, because they're nofloor, they're dirt floors.
As one of 13,.
The old joke is that afterchild number nine her mother
(36:16):
quit going in to deliver thechildren.
She'd just squat in the field,deliver the child there and
continue hoeing beets.
Megan Sheely (36:25):
That paints quite a picture.
Colter DeVries (36:30):
Actually, one year for Mother's Day, I thought
I was going to be all trendyand hipster and make my
grandmother a nice meal, and mymom.
I bought some lamb.
Lamb is a delicacy.
I was like, okay, I'm going tomake lamb sliders with some form
(36:55):
of hipster crumble white cheeseor something.
Yeah, some form of arugula andwhite cheese.
I don't know something fancierthan American craft cheese,
craft singles.
I made these sliders and mygrandma took the first bite.
(37:16):
Her eyes just got huge and shespit it out in front of me and
she was really embarrassed aboutthat.
She ran off crying.
When she came back she said I'msorry, I didn't mean to insult
you like that.
I appreciate your efforts here,your consideration, but when I
(37:40):
was a kid we were so poor thatneighboring ranchers would give
us mutton.
All I ate was mutton as a kid.
To this day I can't eat sheep.
I didn't know that.
Those are the kinds of things.
Megan Sheely (37:56):
It's like how do you get your grandparents to
tell those stories?
Absolutely, because that's whatit'll just be lost.
Colter DeVries (38:05):
Yeah, that's one of the beauties of agriculture
is you have a lot of legacy andheritage coming down from those
generations.
As you mentioned your sugarbeater network.
Megan Sheely (38:21):
Yeah, for sure.
I think that's just agricultureas a whole.
Everybody's for the most partvery proud of where they came
from and proud to carry that on,Even though I'm not on our
family farm or very involved inthat, just to be involved in
(38:42):
agriculture it just means a lotto me.
Colter DeVries (38:46):
All right, I see .
Can you tell me when you getinto these M&A deals, do your
clients ever ask you to helpthem market their facilities?
Megan Sheely (38:58):
Just because of the kind of unique position we
have in the industry, wherewe're working with clients that
are considering sales or mergersand then we also have clients
that are looking at how to growtheir companies, we occasionally
have the opportunity to kind ofconnect the dots and put buyers
(39:19):
in contact with sellers or viceversa.
Now, we always have to be supercareful with that, to not to
always be super respectful ofconfidentiality, and we
certainly aren't brokers.
But it's really a fun part ofthe business to occasionally
kind of play matchmaker and helpfacilitate a connection and
bring our network together tosee what kind of opportunities
(39:40):
we can create for our clients.
Colter DeVries (39:43):
Like farmers only, but on a more
commercialized level.
What are you looking forward towithin the farm finance and
appraisal industry?
Megan Sheely (39:53):
You know, going forward, I think there's going
to continue to be.
I mean, it's no questionthere's going to continue to be
challenges and ups and downswithin our industry, but every
time one of those challenges orhurdles comes about, there's
going to be new ideas andinnovations sparked out of that.
So I think one of the most funparts about our role within the
(40:15):
industry as crown appraisals isthat we are on the inside track
when our clients are looking atthose different ideas and
opportunities.
So I'm just super excited tocontinue to learn and understand
about those innovations thatare on the forefront and help
our customers identify the valuethat's associated with those
opportunities.
Colter DeVries (40:35):
Well, I did before we go.
I did want to say I was talkingto Andy Ron Montana land source
.
Often he's a co-host, he's theoutgoing president of Montana's
chapter of ASFMRA and Imentioned that you were coming
up on the podcast and he saidthat's very impressive that you
(40:57):
are an ARA at 27, I believe, andso he was.
He sends his kudos.
He thought that that was veryimpressive, what you have
accomplished.
Megan Sheely (41:06):
Wow Well, thank you.
Colter DeVries (41:09):
Yeah, and maybe it.
Maybe other young professionalscan reach out to you for
questions about how you got yourstart and what it takes to
become an appraiser.
Megan Sheely (41:22):
Yeah, definitely happy to serve as a resource,
Whether it be within theappraisal industry or
agribusiness as a whole.
Like would love to visit withanybody interested in talking.
Colter DeVries (41:34):
Well, thanks for coming on the podcast.
It's been enjoyable.
Megan Sheely (41:38):
Yeah, thanks, Colter.
Colter DeVries (41:39):
They warm in Fargo you as well.
Megan Sheely (41:43):
Enjoy the rest of winter.
Colter DeVries (41:45):
And thanks everyone for tuning into the
Ranch Investor podcast.
We at Ranch Investor are veryinterested in hearing your
thoughts, your opinion, yourwants, desires, hopes and dreams
everything on ranchsyndications, ranch investment,
ranch real estate syndicationsand DPP's direct participation
(42:06):
programs.
Please reach out.
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