Earlier this week, we heard from a business owner on his thoughts about employee ownership after visiting most recent “What’s Next” event at Aquascot.
This week, he continues his thoughts on the meeting and discusses why he is seriously considering it as a potential succession strategy for his business.
Both Galloway & MacLeod and Aquascot approached exit in a similar way, with the founder(s) selling a percentage of shares each year over a considerable time. This reduces pressure on the business to finance the share purchase and can mean the vendor benefits by any growth in share value over the years. However, it does mean the vendor does not get full value up front.
In both cases, the founders have remained with the business and that does seem to make for a smoother transition. I can see this phased transfer makes for a smoother transition for the business and being able to control the pace of exit must be an attraction to vendors.
Employee Benefit Trusts are a feature in both companies. Aquascot is aiming for 100% of the shareholding to be held in Trust, whereas Galloway & MacLeod also operate a tax effective Share Incentive Plan. The company admitted this had been slow to take off, but now has over 90% participation. Interestingly, productivity has increased in line with share purchase.
Both visits provided much food for thought. They were very different businesses, but with many similarities. Members of staff demonstrated a strong commitment to their company that was encouraging to see, and a level of commercial awareness I wouldn’t have expected from employees in non commercial roles.
Both businesses appear to operate very efficiently; there was no evidence of constant committees or protracted decision making. Both businesses are thriving and have ambitious plans for the future. It was inspiring to see the commitment to the sustainability of the local community.
Seeing employee ownership in action is persuasive and it’s an option we’ll give serious consideration. I’d certainly recommend any prospective business vendors take advantage of the Co-operative Development Scotland programme to explore whether a sale to employees might fit with their aspirations.