Author Archives: CDS Admin

Employee Ownership Explained – The role of the accountant in the EOT transaction

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The increasing interest in employee ownership was reinforced on Wednesday 16 September when our webinar attracted over 60 attendees. Dougie Rae, Partner, EQ Accountants has worked on a number of employee ownership transactions and shared his experience in what was agreed to be a tremendously valuable presentation, followed by a lively Q &A session.

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CELEBRATING WOMEN IN EMPLOYEE OWNERSHIP

Angela Wardrope hi res

Research carried out by Women’s Enterprise Scotland shows that the contribution made by female-owned businesses to the Scottish economy continues to grow. The GVA of the sector grew from £5bn in 2012 to £8.8bn in 2015 – a 76% increase – while it is now responsible for creating 231k Scottish jobs – up from 153k in 2012.We have also seen a rise in the number of female-fronted businesses in the employee ownership sector, with several of the businesses transitioning to employee ownership being owned or run by women.

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COLLABORATE TO TENDER – JOINT WORKING TO SECURE NEW CONTRACTS

Collaborating with other businesses can bring a number of benefits such as enhanced profile, shared resources and knowledge, and the reduction of costs and risk when exploring new markets and innovations. Increasingly, businesses are also coming together to access larger contracts.

We spoke to CDS advisors Gill Joy and Gavin Tosh, who have collaborated together themselves to provide unique specialist support to CDS clients on collaborative tendering.GillandGavin

Q1. Tell us a little more about yourself?

Gill: I have over 30 years’ experience in business management and consultancy, focussing on collaborative projects and programmes. I set up Intend Business Development in 2006, which helps SMEs and social enterprises compete with larger national players on public sector tenders.

In 2011, Gavin and I decided to collaborate to design a new training programme for consortium bidding, working closely with the CDS team. We continue to tender jointly for various contracts where our complementary skills can add value for clients, and we have worked as CDS specialist advisors for consortium co-operatives since 2013.

Gavin: I am a practicing solicitor and started my own niche legal business in 2009 specialising in business law. Before I was a solicitor I was a contracts manager in large engineering-based companies, and was frequently involved in tendering for contracts, including collaboratively.

Q2. Why is tendering an important area for businesses, including SMEs?

Gill: £11billion worth of business is put out to tender each year in Scotland alone, with a huge number of private and third sector contracts also subject to a tendering process. Although these contracts will be for goods and services that smaller businesses are well placed to provide, so many SMEs aren’t going after them, missing out on an enormous source of business.

Q3. What are the barriers for SMEs?

Gill: Particular barriers for SMEs include their small size, lack of specialist expertise, and limited resources to identify opportunities and prepare tender responses – a time-consuming process. Larger organisations can have in-house resources dedicated to the tendering process, but this is usually out of the question for SMEs. Small companies are encouraged by buyers to form consortia in order to bid for contracts, however, collaboration can be viewed as a barrier in itself. Many SMEs don’t know where to start, from finding the right partners to getting a sound agreement and working together to create a winning bid.

Q4. How can collaboration help?

Gavin: By collaborating with other businesses, increased capacity and a wider range of available resources and skills make it possible to bid for larger contracts. Coming together under a single brand in a consortium co-operative can really consolidate the members’ joint offering and put them on an equal footing with larger companies pitching for the contract. With each member business focusing on its own strengths, the customer gets a team of true specialists in their respective fields instead of a larger organisation which may not be strong in all areas.

Gill: Collaboration also means more eyes out there to spot opportunities in the first place, and the costs and time involved in the tendering process are shared, making it less of a burden on smaller businesses. An added benefit of working closely with other businesses is the significant amount of organisational learning that each partner can derive from the experience.

Q5. What are the options?

Gavin: There are different ways to collaborate when tendering. The most common approach is to have a main contractor with a number of subcontractors, however, this is rarely a collaboration of equals. Subcontractors may have little say in important decisions and can be subject to the whims of the main contractor in terms of what work they get and when they are paid.

Tools and techniques to improve the position of subcontractors in this situation are available, however for a truly co-operative collaboration where all parties have an equal say, there is the consortium co-operative model.

In a consortium co-operative, members work together for a common goal whilst retaining their own brands, identities and control. Members can be limited companies, partnerships or individuals and the membership can be of any size from two businesses upwards. Each member business has an equal say on consortium activity, no matter its size, and both exiting and bringing in new partners is simple. As a recognised legal entity with limited liability, the model provides a durable yet flexible framework for collaboration.

Q6. What support is available?

Gavin: CDS’s principal form of support is called Consortium Expert Support – it is free of charge to eligible businesses and provides assistance to form a consortium co-operative.  This year CDS is also running a pilot service called Collaborate to Tender which will offer specific tendering support to a small number of eligible existing consortia. For more information about consortium support visit it our page on the Scottish Enterprise website: www.scottish-enterprise.com/collaboration.

Q7. Can you give us an example of successful consortium tendering?

Gill: A CDS client that has experienced success in tendering is Indigo House, a consultancy service for the housing and regeneration sectors. Formed by members AE Housing and is4 Housing & Regeneration, it provides consultancy support, thought leadership, research services and interim management to housing associations, local authorities and housing developers.

When tendering for new business, both companies had often found themselves up against larger housing consultancy firms including DTZ, Savills and Ernst and Young that can offer clients a multi-disciplinary practice. In order to compete, they began collaborating informally. Bidding as two separate companies provided an element of multi-disciplinary skills, but the brand was cumbersome, and the lack of formal arrangement could be concerning for potential clients. Forming a consortium co-operative and bringing their skills together under a single brand has enabled them to successfully pitch for more ambitious contracts.

Gavin: The aims of the Indigo House collaboration are to secure additional work from existing clients in Scotland, expand into the English market with a clear brand offering, build a strong network of associates as part of the co-op model who can be deployed flexibly depending on contract opportunities, and to share the costs involved in business services and activities such as events and marketing.

Happy new year from Co-operative Development Scotland

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By Clare Alexander, head of Co-operative Development Scotland

2019 was another busy year for Co-operative Development Scotland, with our team working hard to spread the word about the benefits of co-operative business models and offer expert support and guidance to businesses across Scotland.

We’ve seen an encouraging number of businesses make their move to employee ownership in the last year. In Glasgow, staff at care provider Aspire Housing, construction firm Pacific Building, engineering consultancy Grossart Associates and architectural practice Anderson Bell Christie were all given a stake in the business. In Edinburgh, IT service provider Quorum Network Resources and contemporary art gallery the Scottish Gallery both set up Employee Ownership Trusts.

The founders of GS Brown Precision Engineering in Fife, garden centre New Hopetoun Gardens in West Lothian, IT provider Exmos in Grangemouth and Dundee based demolition contractor Safedem all saw the benefits of selling to their workforce, as did Stornoway production company MacTV and Shetland-based ESPL Regulatory Consulting and Laurence Odie Knitwear.

The ESPL Regulatory Consulting team at their Shetland location. Picture L-R: Holly Hunter, Diane Wood, Anna Watt, Helen Erwood, Tony Erwood.  Taken 29-03-2018.

The ESPL Regulatory Consulting team

The employee-owned businesses we have supported in previous years continue to report a range of successes and benefits, from growth in size and profit to having a highly engaged and committed workforce.

In May, we joined forces with the Law Society of Scotland and the Institute of Chartered Accountants of Scotland (ICAS) to host our first programme of events aimed at raising awareness of employee ownership among members of the legal, accounting and banking professions. Professional advisers play an important role in informing clients about employee ownership as a business succession model, therefore increasing the number of firms that are able to offer specialist guidance in this area is key to growing employee ownership in Scotland. We were delighted with the amount of interest in the roadshow, with nearly 300 advisers attending.

We also partnered with local authorities, and the Scottish Chambers of Commerce and Business Gateway networks to host our “Selling your business?” series of events, which saw representatives of established employee-owned businesses share their experiences of employee ownership with business owners who were at the start of their journey in beginning to explore their succession options.

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We also branched out into podcasting – with the launch of our Employee Ownership podcast series in September of last year. Combining essential facts about the model, expert insight from EO advisers and solicitors, and the first-hand experiences of employee-owned businesses, the first eight episodes have been heavily downloaded, and proven to be a valuable and unique resource for those looking to learn more about employee ownership.

We’re very grateful to members of the employee ownership community across the country for their help with all of this activity – their support is vital in helping us promote the employee ownership model among Scotland’s business network. As the popularity of employee-ownership in Scotland continues to grow, so does our pipeline, and we look forward to welcoming more businesses to the community in the year ahead.

To learn more about EO and whether it could be right for your business, check out our resources page, listen to our podcast or get in touch with us here using the ‘expert support’ option.

Five Steps to Collaboration

Collaborating with others can be a highly effective way for a business to drive growth and innovation whilst sharing the associated costs and risks.

However, when it comes to forming or joining a consortium, what should a business consider? How does the process work and what are the specific benefits that can be delivered?

Here, CDS specialist advisor Suzanne Orchard shares a brief step-by-step guide to consortium working.

Suzann orchard

Step 1: Identify barriers to growth

For many small enterprises, lack of scale, time, finance or resources can all be barriers to accessing new markets, tendering for larger contracts or simply marketing their services.

Step 2: Look for a potential solution

Teaming up with other businesses to form a consortium is an excellent way to break down these barriers. Suitable for businesses of all sizes operating in any sector, this model can reduce the costs and risks associated with tackling new markets and investing in new products and services. It also enables businesses to share resources and knowledge. Meanwhile, member businesses are able to retain their own brands, independence and control.

Step 3: Find collaborators

Carefully identifying like-minded businesses to work with is crucial. Trust and aligned values and goals are a key factor. In most cases, member businesses operate in similar or complementary fields, and it can help if the businesses have worked together informally before.

Step 4: Choose the right structure

The consortium co-operative model is an effective collaborative business structure. In simple terms it is an organisation run in a shared and equal way by and for the benefit of its members. Members are independent businesses and the consortium can be for any purpose which supports them, for example marketing, tendering, innovating or exporting. Co-operative Development Scotland has a track record in helping businesses form consortium co-operatives and can help you explore the options.

Step 5: Benefit from your collaboration

Collaborating can be a real game-changer for businesses. The Glasgow Canal Co-op is a consortium of over 16 local organisations, established with the aim of unlocking the potential of the canal to create a vibrant neighbourhood for people to live, work and visit. The group sought support from Co-operative Development Scotland to formalise its collaboration, and now aims to encourage greater collaboration in the area and utilise local skills and assets collectively to connect with new audiences and visitors.

The co-operative organises the annual Glasgow Canal Festival, a summer programme of arts, heritage, environmental and watersports activities to celebrate the historic canal and its local communities. The Festival is a great way for the local organisations to promote themselves, reach new customers and make new connections.

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Other potential benefits of collaboration include accessing new markets, and being able to share the risks and costs associated with innovation, such as developing new products or services. Many businesses involved in consortium working also report increased confidence, better business connections, improved knowledge-sharing and an enhanced profile.

The benefits are significant and definitely worth exploring when considering the future of your business.

For more information about how collaboration could help you, please get in touch with us here using the ‘expert support’ option.

STORNOWAY MEDIA PRODUCTION COMPANY MACTV BECOMES EMPLOYEE-OWNED

Stornoway-based production company MacTV recently joined the growing number of employee-owned businesses in Scotland, with 18 employees given a stake in the business.

Established in 2001, award-winning MacTV is the largest independent TV company in the Highlands and Islands. Specialising in factual documentary, arts and music programmes in both Gaelic and English, the company is one of the biggest producers of programming for BBC ALBA. Its main production base is in the Hebrides, with staff also in the central belt, and in recent years the company has also been involved in a variety of international co-productions, working with companies in Canada, Ireland, Iceland and Wales.

When managing director Bill Morrison began to look ahead to his retirement, there were a number of considerations, including a preference to try and ensure that the business remained based in Stornoway, and that the company’s positive community ethos and culture remained at its core. Bill identified employee ownership as a potential ideal solution, and he subsequently got in touch with Highlands and Islands Enterprise to explore the option in more detail. From there, he was introduced to Co-operative Development Scotland.  We caught up with Bill to find out more.

MacTV Group 1

“In the 18 years since it was established, the hugely talented and hardworking team at MacTV has helped build a highly regarded production company which is recognised at both a national and international level for producing important and compelling programming with Scotland’s unique spirit at its heart. With a workforce truly rooted in the community, the passion, skills and local knowledge of our staff is vital to the quality of our output.

“A traditional trade sale may have seen us bought by a competitor, potentially risking job security and compromising our offering. Employee ownership ensures that the company is owned by and run for the benefit of those most close to it, while providing ongoing economic benefit to the area by anchoring the work and jobs in the local community. Our new employee owners now have an increased stake in their own future, with a say in the business, empowering them to shape its direction and drive growth.”

An Employee Ownership Trust has been formed which will hold 90% of the shares on behalf of the employees. The process was managed by 4-consulting, with legal services provided by Blackadders and accountancy support from Mann Judd Gordon.

If you have a question or you want to talk about how employee ownership can help you, please get in touch with us here using the ‘expert support’ option.

GLASGOW CARE FIRM ASPIRE STRENGTHENS COMPANY ETHOS WITH EMPLOYEE OWNERSHIP

Glasgow-based care provider Aspire recently joined the growing number of employee-owned businesses in Scotland, with 186 social care employees across the organisation being given a stake in the business.

Aspire provides a range of services including Self-Directed Support, Intensive/Complex Home Care, Homelessness Emergency Accommodation and Resettlement, Alcohol-Related Brain Injuries Housing Support, Care at Home, Criminal Justice and Young Care Leavers Services. Since 2011 Aspire has annually won a raft of Scottish Care National Awards.

Aspire was established in 2002 by Peter Millar, who has over 47 years’ experience in social work and community care including planning, commissioning, senior management, and developing and delivering services within Local Authorities and the NHS in Scotland.  We caught up with Peter to hear more about his decision to sell the company to its staff.

Portrait of Aspire Chief Executive Peter Millar.

“Employee ownership is wholly consistent with Aspire’s ethos and values.  We are all about empowering people to achieve a better life and a more self-directed and optimistic future. Whilst that approach fundamentally underpins our work with the individuals we have the privilege of working alongside and supporting in the community, it is also highly applicable to our relationship with our employees. 

Employee Ownership enables us to elevate the status of our employees, enhance their opportunities to be more involved in contributing to the growth and development of Aspire, and allows all of those employees to equitably share the benefits from Aspire’s future successes.

“Employee Ownership therefore provides Aspire with a stronger, more inclusive, collaborative and equitable model. In addition to giving all employees a real stake in the organisation, it also secures Aspire’s position as a high quality provider of social care services in Scotland and an organisation that consistently makes a positive difference to individuals’ lives and to their local communities.

“I’m delighted that Aspire Housing and Personal Development Services is in the hands of our committed and highly talented team who have been overwhelmingly positive about this important development for our organisation and are now even more enthusiastic about it. We have a superb senior management team and excellent employee trustees and staff and we are all really excited about the future.”

Staff at Aspire

Some of the Aspire team

Aspire now has a Trust board which includes two elected employee trustees, Euan Jessiman and Cameron Gilchrist.

Cameron added: “On behalf of the whole team, I’d like to give a huge thanks to Peter for giving us the amazing opportunity to share the ownership of Aspire – which has such a positive impact on so many lives – and there’s something very meaningful, for both the whole team and the people we support, in becoming employee owned.”

If you have a question or you want to talk about how employee ownership can help you, please get in touch with us here using the ‘expert support’ option.