PALIMPSEST BOOK PRODUCTION LTD ENTERS NEW CHAPTER WITH EMPLOYEE OWNERSHIP TRANSITION

Falkirk-based Palimpsest Book Production Ltd, one of the UK’s market leaders in book production, has joined the growing number of employee-owned businesses in Scotland, with 21 employees given a stake in the business.

Established in 1994 by Craig and Ruth Morrison, Palimpsest provides the full range of pre-press services, including typesetting, proofreading, digital publishing, design and reprographics, to the UK publishing market. From modest beginnings based in the Morrisons’ home, the company quickly grew, adding several staff and moving to new premises within 12 months.

Craig and Ruth have now sold a controlling interest in the business to an Employee Ownership Trust which will hold the shares on behalf of the employees and allow them to participate in the future success of the business.

Palimpsest Book Production Ltd, Falkirk, 30/08/2018: Staff and directors at Palimpsest, including managing director Craig Morrison (third from left in back row), director Ruth Morrison (seated left), director Andy O'Neill (fourth from left in back row), director John Forsyth (sixth from left in back row) and trustee director Sarah Eddie (correct, far right in lower row).

The Palimpsest team 

We spoke to Craig to find out more about the decision to become employee-owned.

Craig said:  “Looking to the future, we realised that at some point we would need to create a succession plan for the business. We wanted to ensure that when we did eventually retire, we could guarantee that Palimpsest would continue to operate successfully.  Doing some research into our options, I attended a seminar on succession planning organised by Co-operative Development Scotland.

“We were immediately attracted to the idea of transitioning to employee ownership because it would enable us to realise part of our investment while continuing to work in the business until we are ready to retire.

“Employee ownership will also ensure that Palimpsest continues to thrive, offering employment and careers in Scotland into the future. With a client base ranging from leading international publishing companies to self-publishing authors and an ‘end to end’ range of pre-press services, the new Employee Ownership Trust has a strong foundation.

Craig continued: “We’ve had an amazing journey over the last 24 years, with clients telling us that we have become their trusted partners in both print and digital book publishing. Ruth and I are delighted we now have a succession solution in place, though have no plans to retire for a while yet.”

20/20 PROJECT MANAGEMENT JOINS SCOTLAND’S GROWING EMPLOYEE OWNERSHIP SECTOR

The UK’s leading specialist provider of project management training, 20/20, is one of the latest Scottish businesses to announce its transition to employee ownership, with 20 employees becoming owners.

The project management and project controls training company delivers courses and consulting services throughout the world from its Aberdeen base.  It works with major names across a range of sectors including BP, Centrica, Transport for London, BAE, Rolls Royce and AMEC, as well as a range of public sector organisations, and has an annual turnover of £3million.

An Employee Ownership Trust (EOT) has been formed and holds 61% of the shares on behalf of the employees with the option to acquire the remaining shares in the future.

Becoming an employee-owned company has been a positive step for 20/20, with the board of directors deciding it was the right move to enable the engagement of the employees to effectively take the business through its long-term goals.

We caught up with founding director Tony Marks to find out more about the decision.

Mr Marks said:  “Initially employee ownership was considered as part of 20/20’s succession planning strategy, and after I attended a succession masterclass run by Co-operative Development Scotland the benefits became very apparent and the plans to make it a reality came into action.

“We had developed a future leaders programme with the eventual aim of preparing some of our staff to oversee business operations.  Myself and two fellow directors were the three main shareholders in the business and we still hadn’t resolved the issue of realising the value of our individual shares.

“Hearing first-hand about the process and experience of becoming employee-owned really helped us understand the potential benefits, and we agreed it was an effective solution to our succession issues. The prospect of a more engaged workforce and a culture which encouraged greater innovation really appealed to us. We held a team meeting to tell our staff, and the news was very well-received.

“Employee ownership allows myself and my fellow directors to remain in the business as we continue to actively develop our future leadership team, with the knowledge that 20/20’s future is secure. We hope that with a highly-invested workforce, the company will continue to grow and succeed well into the future, with all employees sharing in the rewards.”

Emma Davidson, 20/20’s employee trustee, added:  “The employees see this as a very positive thing and are collectively looking forward to building on 20/20’s business success for years to come.  By becoming an employee-owned company, we feel empowered to create an environment that suits us as a workforce, ultimately increasing our productivity to bring 20/20’s success to the next level.”

20/20 Business Insight of Aberdeen. (back row left to right) Karen Brown, Emma Hart, Jamie Birse, Jacob Bonner, Business Development Director Tom Vincent, and Operations Director Neil Harkin. (front row left to right) Emma Davidson, Service Delivery Director Graham Chapman, Finance Director Mandy Buck,  and CEO Tony Marks. Taken 15-08-18

20/20 Business Insight of Aberdeen.
(back row left to right) Karen Brown, Emma Hart, Jamie Birse, Jacob Bonner, Business Development Director Tom Vincent, and Operations Director Neil Harkin.
(front row left to right) Emma Davidson, Service Delivery Director Graham Chapman, Finance Director Mandy Buck, and CEO Tony Marks.
Taken 15-08-18

NEW LEADERSHIP GROUP FOR EMPLOYEE OWNERSHIP – SCOTLAND FOR EO

First Minister Nicola Sturgeon recently announced the establishment of a new industry leadership group which will aim to make Scotland the best country in the world for employee-owned (EO) businesses.

Under the strapline ‘Employees CAN DO Ownership’, Scotland for EO aspires to increase the number of employee and worker-owned businesses from around 100 to 500 by 2030. It will be backed with £75,000 of Scottish Government funding and will be co-chaired by Jamie Hepburn, Minister for Business, Fair Work and Skills.

We caught up with some of the people involved to find out about the reasons behind the establishment of the group.

The First Minister, who revealed the news during a visit to the employee-owned Auchrannie resort on Arran, said:

“All the evidence tells us that employee ownership delivers benefits to business performance, the people who work in them and the places in which they are located. This has certainly been the experience of the Auchrannie team in Arran.

“The health of the Scottish economy depends on having a diverse range of business-types and employee ownership clearly has an important role to play in that.

“We want to make it easier for companies and workers to find out more about this model and to move towards it if it’s right for them. Scotland for EO will help to make this into a real option for businesses across Scotland.”

John Clark, chair of employee-owned business Novograf and member of the steering group behind the initiative, described how the group aims to cultivate the perfect environment for further growth in Scotland’s employee ownership sector.

“We have a choice: to be passive and allow the development of a support environment for EO companies to happen without industry input, or to take a proactive approach and seek to actively influence how that environment evolves. We believe the proactive approach creates the prospect of making Scotland the best country in the world to establish and grow an EO business.”

Evidencing the increasing popularity of EO in Scotland, Co-operative Development Scotland director Sarah Deas concluded:

“The appetite for employee ownership has never been greater. In the last five years the number of employee and worker owned businesses operating in Scotland has trebled and this past year we have been working on a ‘deal a month’ on average.  Our client pipeline is expanding too, indicating take-up of the model will continue to accelerate in future years.

“Promoting employee ownership helps drive growth in the economy and create greater wealth equality in society.”

EMPLOYEE OWNERSHIP PROVIDES PERFECT SUCCESSION SOLUTION FOR PRODUCT DESIGN CONSULTANCY

Edinburgh-based i4 Product Design Ltd is an ambitious Scottish company which was formed in 2003 by four founding directors, Brian Combe, Ewan Maxwell, Gordon Miller and Jim Ward, who went on to build a successful business with a strong track record.  Three of the four founders, Brian, Ewan and Gordon, are still with the business and form the current board of directors.

i4 has a mix of designers, innovators and engineers that collaborate as one team to deliver eye-catching and well-engineered products. Specific services include project management, industrial design, mechanical engineering, electronics and systems engineering, prototyping and manufacturing support.

The business has designed some well-known home and garden products for brands such as Flymo and Bosch as well as medical diagnostics and prosthetics products for world-leading vision device manufacturer Optos (part of the Nikon group) and Touch Bionics (an Össur Company).

In May this year, the company announced it had completed its transition to become an employee-owned business, with 14 members of staff becoming majority owners.  An Employee Ownership Trust (EOT) has been formed and currently holds 75% of the shares on behalf of the employees; the co-founders have an equal share of the remaining 25% but it is envisaged the EOT will eventually hold 100%.

I4 Product Design, Edinburgh Image shows directors and staff of i4 Product Design at their Edinburgh headquarters. Taken 23-05-18

Directors and staff of i4 Product Design at their Edinburgh headquarters 

We caught up with Brian Combe, i4’s managing director, to find out more about the decision to become employee-owned. Brian said:

“The main objective of establishing an employee ownership structure was to provide a stable platform for growth by allowing our employees to feel more engaged, informed and integrated into the company.

“Many exit options had been considered over the years, even employee ownership which at the time we wrongly assumed would be too complicated for us. However it soon became clear that employee ownership was an ideal fit for the aspirations of the directors, for leaving a legacy of a sustainable and profitable company.

“Since the company’s inception we have always strived to do the right thing by our employees, and so once we understood the principles of employee ownership, we knew it was the perfect vehicle for us to begin the process of engaging our team for the next chapter of our company’s development.

“We were extremely satisfied with the support we received from CDS and our legal and financial teams on implementation. Although there is a lot of hard work still to complete to make employee ownership work for us, we firmly believe that this will be good in the long-term for everyone involved. 

“All employees were kept in the loop from the start of the process. We held off-site strategy days where a wide selection of our employees attended and contributed to discussions on many points including succession and various models of ownership. Once the employee ownership model was debated in more detail and identified as the preferred option, a wholesale engagement with the employees was undertaken on a regular basis as the company stepped through the process. Keeping the lines of communication open proved to be very useful as feedback from the employees during the sessions ultimately shaped the finer details of the EOT.

“Time will tell how it might help the business but the hope is that transferring ownership to the employees is recognised as a genuine commitment and display of confidence by the co-founders in the employees being able to take the company to the next level.  We hope that the process will encourage the staff to bring new ideas, add real energy and drive to take the business forward and importantly make them feel part of something exciting and have a real sense of pride working for i4.”

EMPLOYEE OWNERSHIP IS CLEAR SUCCESSION SOLUTION FOR BALHOUSIE GLAZING

Perth-based glazing specialist Balhousie Glazing recently joined the growing number of employee-owned businesses in Scotland, with 12 staff becoming owners. Operating throughout Perth, Dundee and beyond, the company provides a wide range of services such as windows, doors and patio installation and the building of conservatories, porches and orangeries. The team’s experience spans small residential builds and renovations to major commercial projects.

We spoke with founders Malcolm Sweeney and Drew Hey, who set up Balhousie Glazing in 1993, about the decision to sell to their employees.

Employees and directors at Balhousie Glazing in Perth  Pictured Directors in centre Drew Hay (on left) with Malcolm Sweeney (on right) Taken 16-07-18

Employees and directors at Balhousie Glazing in Perth.

Malcolm said: “Drew and I had been discussing the issue of succession, and as neither of us had family members in the business, the only option we were really aware of at the time was a traditional trade sale. We would likely have been purchased by a rival company, something we didn’t want. However, one day we were reading The Courier, our local paper, and spotted an article about a nearby seminar being held by Co-operative Development Scotland the following day and decided to go along.

“It was about business succession and one of the speakers was Bob Anderson, financial director of Bentley’s Shopfitting, an employee-owned company based in Dundee. He spoke about how the EO process had worked for them and the benefits of employee ownership and we were really sold on it.

“A lot of our staff have been extremely loyal, and it was essential to us that we safeguard their jobs and ensure they could continue paying their mortgages and providing for their families. Being employee-owned would anchor the company in the local area, keeping our team’s extensive skills here too. We contacted CDS and one of its advisers paid us a visit to give us more information before we decided to proceed with the employee buyout.”

Drew added: “We had a meeting with our employees about the decision and they seemed really happy and ready to embrace their new role as employee owners. With a vested interest in the business, they will reap the benefits of strong performance, so it’s been a positive boost for morale and motivation.

“As well as retaining jobs, employee ownership will ensure the business maintains its values and ethos. Much of our work comes from word-of-mouth recommendations, and our reputation, which we have been building for 25 years, is very important to the success of the business. A trade sale to a competitor may have affected our standing in the local community or impacted the excellent customer service for which we are renowned, both of which could have a negative effect on referrals.”

EMPLOYEE OWNERSHIP IS SOLUTION TO RETAIN OWNERSHIP OF SCAN BUILDING SERVICES IN DUNDEE

Dundee-based building engineering company Scan Building Services Ltd, founded in 1980, operates in the construction industry as a specialist contractor, providing services such as heating, ventilation, air conditioning and plumbing systems.  Serving clients in the Dundee area and beyond, the company’s experience ranges from installations in domestic properties to major commercial and industrial buildings.  Scan Building Services’ clients include construction contractors, local authorities, health trusts and private companies.  It has an annual turnover of £3.9million.

In May this year, Scan Building Services announced it had completed its transition to become an employee-owned business, with 56 members of staff becoming owners.  Previous owner David Anderson has sold 100% of the shares to an Employee Ownership Trust, which is holding them on behalf of the employees. The deal was structured in order to make it affordable to the business without affecting its ability to reward the team and reinvest for the future. The plan is to also introduce an Enterprise Management Incentives (EMI) scheme for senior management.

We spoke to previous owner David Anderson and Graham Prophet, part of the senior management team, to find out more about the decision to become employee-owned.

Scan Building Services, Dundee, 11/05/2018. Scan Building Services, pictured on Dundee Law, Dundee. Directors Graham Prophet (correct, lower front centre with navy coloured jersey) and Mark McKenzie (lower front centre, black jacket, tie and white shirt) with other Scan staff. Photography for Scottish Enterprise from: Colin Hattersley Photography - www.colinhattersley.com - cphattersley@gmail.com - 07974 957 388.

Graham said: “Throughout the years we have endeavoured to provide the best possible quality of products and services to our clients and to pride ourselves in the standard of the work we provide.  To do this we employ a highly skilled workforce of dedicated and local craftsmen, many of whom trained through the company’s apprenticeship scheme.  So when we were considering our options for future ownership of the business, we wanted to ensure the jobs were retained in Dundee and the staff were rewarded for any success.  Employee ownership ticked all of those boxes and following a feasibility study last year, we knew it was the best option for us.

“A fair price was achieved for the previous owner that also ensured sufficient reserves were left in the company to provide working capital to invest for the future.

“We notified the staff early on in the process and made sure they were involved and updated as the project progressed.  All employees now have a real interest in the success of the business which will motivate them to perform and achieve.”

David Anderson added: “Rod Mathers from Henderson Loggie, a valued adviser to the business over the past two decades, suggested this very effective structure which met my objectives and allowed ownership of the company to pass to the employees, who now have a vested interest in making it the best company it can be and to benefit directly from their efforts. The team at Henderson Loggie guided us through the whole process from feasibility stage right through to completion most efficiently. I’m very proud of the way things have worked out and I wish the new owners of Scan every success for the future.”

WOOLLARD AND HENRY CELEBRATES LARGEST EVER CONTRACT AS EO SUCCESS CONTINUES

Established in 1878, Dyce-based manufacturer Woollard and Henry initially began operating in the papermaking industry. The company developed a notable portfolio of paper forming products such as dandy rolls, the cylindrical mechanism used for imprinting watermarks in paper, and was renowned in the industry for its quality, reliability and skill. However, in the early 2000s, Scotland’s once-thriving paper sector was in decline. Woollard and Henry was struggling and, unable to find a buyer, the family owners were preparing to shut it down. Employee ownership was raised as a potential solution, and with strong support from an eager workforce, an employee buyout was completed in 2002.

We caught up with managing director Fred Bowden to hear about the company’s success since.

“When the prospect of an employee buyout was first raised back in 2002, there were around 20 staff, all of whom saw a future for Woollard and Henry and the unique skills and expertise it could offer. They fully embraced the opportunity, being very supportive of the move to employee ownership and passionate about keeping the business going.

“The workforce’s newly-held stake in the business helped drive an overwhelming response to the company’s need to diversify. Taking advantage of our location in an oil and gas stronghold, it was recognised that our core skills of high-end fabrication and engineering could be transferred to the energy sector. We adapted our strategy accordingly, with the fabrication of personnel transfer vessels for the offshore energy markets in addition to its range of papermaking and watermarking equipment.

Woollard and Henry, Dyce, Aberdeen, 16/08/2012 Woollard and Henry team with managing director Fred Bowden (front) - pictured with 'Frogs' - a crane-assisted personnel transfer pod for oil and gas industry platforms. Photography for Scottish Enterprise / Cooperative Development Scotland from:  Colin Hattersley Photography - colinhattersley@btinternet.com - www.colinhattersley.com - 07974 957 388

Woollard and Henry team with managing director Fred Bowden pictured with ‘Frogs’ – a crane-assisted personnel transfer pod for oil and gas industry platforms.

“After an initial difficult few years, Woollard and Henry has continued to thrive. We involve the employees in all of the major decisions about the running of the business, and their personal investment in the company’s performance has helped develop a culture of constant innovation. We now employ 64 people and operate from five locations across the globe, going from almost zero international trade to exporting 60% of our output. We have also recently won our biggest contract to date, which will see our turnover increase to over £10million this year.”

If you would like to learn more about how employee ownership could benefit your business, please get in touch to arrange a chat with one of our expert advisers.

EMPLOYEE-OWNED STEWARTRY CARE CELEBRATES AWARD WINS

Dalbeattie-based care at home provider Stewartry Care became an employee-owned company in 2004.  It has more than 100 staff providing care at home services across Dumfries & Galloway.  In the first year of employee ownership its turnover increased by 16% and profitability by 39%.  Since then the company has continued to flourish, with new services including a Foot Care and a Responder Service supporting over 400 individuals.

We caught up with Stewartry Care manager Debbie Cochrane to find out more about the company and its recent successes.

“We believe that employee ownership is good for everyone involved in the company.  Our employees are happy at work which is demonstrated by our staff recruitment and retention records.  The staff benefit from being able to influence the direction of the company, being informed on performance and having the opportunity to stand for election as a director or trustee of the company. Our clients also benefit from having a highly motivated team, knowing that their care team is empowered and the reassurance that the company will remain locally owned and run for the benefit of local people.

“We have a successful business model that works well for us, which is evidenced by the fact we’ve just won the Scotland’s Care at Home Provider of the Year award at the Scottish Care Awards in Glasgow.”

The awards recognise the great work undertaken by organisations and staff who work in care at home and housing support services. The company has also just been awarded Outstanding Social Enterprise at the Dumfries & Galloway Business Awards.

Stewartry Care

The Stewartry Care team at the Dumfries and Galloway Business Awards

Debbie continued: “I’m incredibly proud to manage such an amazing team; these awards recognise all their hard work.

“Our challenge is to stay at the top. We see ourselves as part of the community and we have an important role to play to support people who need our services. In addition to our recent award wins, we’ve been celebrating receiving top marks from the Care Inspectorate.  We were given a rating of six following an unannounced inspection – the highest mark possible.We were thrilled with the grading and with the feedback we get from our service users. This is a fantastic achievement by our employees and we’ll all work together to find ways to retain the ratings and improve what we do for the people of Dumfries and Galloway.”

EMPLOYEE OWNERSHIP – MAKING A SUCCESS OF SUCCESSION

We caught up with Rod Hutchison, a partner at law firm Ledingham Chalmers, to find out why he thinks employee ownership could be a great succession option.

RodHutchison

Rod Hutchison, partner at Ledingham Chalmers

Succession is an issue that many business owners choose to ignore, but it’s not one that’ll go away.

Bearing in mind planning and preparation make for a painless succession process, it is important shareholders take the time to properly explore exit routes, and there are a number of options on the table.

Many business owners avoid the topic because they can’t bear the thought of someone else owning their business.  And that’s understandable.

Entrepreneurs invest their time, their energy and their expertise into their company, so it can be difficult to think about seeing another name over their door. The trade sale can mean relocation, and for many business owners, there’s a reluctance to jeopardise the employment of a loyal workforce.

I attended a Scottish Enterprise-hosted seminar recently that presented a different kind of exit that could be the solution these business owners are looking for: the employee ownership trust (EOT).

The speaker was tax specialist Graeme Nuttall, author of the Nuttall Review of Employee Ownership, which was prepared as an independent review for the Department for Business, Innovation & Skills (BIS).

Graeme Nuttall

Graeme Nuttall, author of the Nuttall Review of Employee Ownership

Graeme is responsible for the introduction of the EOT, ushered in with the Finance Act of 2014, and set up specifically for companies where a significant shareholding is held in the interests of the employees.

The aim is to allow owners to sell the business to their employees, putting the company into the hands of those who often know it best: those inside the firm.

In this way, business continues as usual.  Relationships are maintained and jobs are protected for as long as the business continues to flourish.

What’s more, there’s mounting evidence businesses tend to outperform conventionally-structured firms on a range of different factors including productivity, profitability, customer satisfaction, innovation and employee health and happiness.EOTrust1 LinkedIn preview dimensions

For example, Matrix Evidence’s Employee Ownership Association-commissioned research said this model can improve employee satisfaction, innovation and productivity (with a tailored approach likely to be most successful).

Plus, the association’s own impact report said the growth rate of employee-owned businesses was 50% higher than the UK economy in 2012.

Tax incentive

The government introduced a tax incentive to promote the take up of EOTs.  If a business owner sells a controlling interest in their company to its employees, then that transaction is exempt from capital gains tax, subject to certain conditions being met.

The company functions like any other private business: a board of directors is still responsible for driving the success of the company, and management continues to run the organisation.

However, the shares are generally held in the EOT on behalf of the company’s employees, rather than directly by the employees themselves.

The seller can, and often does, remain involved in the company for a period to ensure a smooth transition to employee ownership.

The path to ownership

The path to employee ownership can be quite straightforward and, as these transactions don’t have the adversity you sometimes find in trade sales, they can be a smoother and often a more collaborative deal.

And, as the parties involved are internal, there is no need to open up company to external scrutiny. 

It was interesting to hear from Sarah Deas of Scottish Enterprise who described how the number of employee-owned businesses headquartered in Scotland is just about to pass the 100 mark: a threefold increase over the past three years.

And with the number of employee owned firms in the UK sitting at around 300, Scotland is certainly punching well above its weight.

Employee ownership means that companies remain local, sustaining jobs and skills, and both Scottish Enterprise and Highlands & Islands Enterprise offer financial support and signposting to business owners looking to explore this further.

EOTrust5 LinkedIn preview dimensions

As the baby boomer generation approaches retirement age, it’s easy to see why employee ownership is gaining traction as a succession solution —

  • The owner achieves the exit they want at a price they are happy with
  • The employees have a stake in ensuring the company’s future prosperity
  • It’s business as usual for customers and suppliers

And because the trust can exist for the long term, the issue of business success is resolved for the future.

Winners all round.

FOUNDERS’ VISION PUTS AUDIO-VISUAL COMPANY INTO EMPLOYEES’ HANDS

Employees of Glasgow-based Mediascape were delighted to hear that they are to become the owners of the company in a move which sees the majority of the shareholding transfer into an Employee Ownership Trust.  Angus and Shona Knight, owners of Mediascape, announced their plans at a meeting of all employees. The couple had considered a number of options and rejected several approaches to buy the company.

Mediascape designs, supplies, installs and maintains audio-visual and videoconferencing systems working with an impressive client list that includes the University of Glasgow, Strathclyde University, St. Andrews University, Historic Scotland and the National Trust for Scotland as well as many prestigious private and public sector clients. The company was set up in December 2003 and started trading in January 2004 with four members of staff. Turnover for this year is likely to be in excess of £5m, the company’s best trading year yet. There are now 24 employees.

We spoke to the team about their experience of transitioning to employee ownership.

Mediascape, Glasgow, 01/12/2017.  Mediascape staff, with Angus and Shona Knight (front). Photography from: Colin Hattersley Photography - www.colinhattersley.com - cphattersley@gmail.com - 07974 957 388.

The Mediascape team with founders Angus and Shona Knight at the front.

Shona said:  “Too often a company is sold and before long, it disappears and the jobs go.  We couldn’t do that. We have a very talented team of people at Mediascape who have shown such loyalty to Angus and I over the years.  It was time for us to recognise that loyalty.”

Angus commented: “One of the attractions of choosing this path is that there will be continuity for Mediascape customers and staff. Shona and I plan to stay on for the next few years to ensure a smooth handover and allow the management team time to get to grips with running the business.  We’re retaining a 20% stake in the business to demonstrate our commitment to the staff that we’re still part of the show.”

Lee Ferrie, one of the first employees of Mediascape and now engineering manager, added:  “Mediascape is a great company to work for. I guess we were all a bit concerned about what would happen when Angus and Shona decided it was time to move on. Now, our future is in our hands and it’s our job to continue the company’s success. It’s an exciting opportunity and we’re all up for the challenge.”