Tag: Carole Leslie

Benefits of employee ownership are clear

ICAS members and their clients gathered in Inverness last month to hear about employee ownership as an exit solution. 

Here, ICAS member Peter Mitchell reflects on the day and looks at how the ownership model can benefit businesses in the Highlands.

As advisers we are careful not to direct our client towards any particular ownership model. It’s our job to provide them with sufficient, comprehensive information to enable them to make an informed choice.

One of my clients is employee-owned and I’m convinced of the benefits. It’s a model with particular relevance to the Highlands – independent, owner-managed and family businesses are a significant part of our economy.

Exit to a trade buyer from elsewhere places a threat on the future of the business in the local area. We need to sustain opportunities for our young people and retain quality jobs in the community.

ICAS logoCarole Leslie, a Co-operative Development Scotland (CDS) specialist adviser, reinforced the economic benefits of employee ownership in her presentation. Most of those present did not know how widespread employee ownership is; I didn’t know that the architects of the Eden Court Theatre were 100 per cent employee owned, or that the project managers of the Skye Bridge, Arup, have been employee-owned since 1974.

Chris Kerr, from Harper Macleod, is a leading authority on employee ownership and he talked the audience through the technical aspects of the model and the transition process. He stressed the importance of involving employees in the transaction as this helps shape a better outcome and wins greater engagement going forward.

The highlight of the session was the story of Aquascot, delivered so eloquently by ICAS member Robert Murray, a company founder and its finance director. Aquascot employs 150 people in Alness and has a turnover of £40m. The founders could have sold the business – and had some lucrative offers – but their commitment to Easter Ross and to an ethical way of doing business convinced them to look at other options.

Their main customer is Waitrose, and their employee ownership model fit what the founders were looking for. With some guidance from Waitrose, John Lewis Partnership and John Housego of employee owned WL Gore, the sustainable seafood company is looking to become fully employee-owned by 2016.

Chris Kerr summed it up well: “Employee ownership won’t fit with every business, but where it does, the results can be remarkable.”  It was encouraging to see so much interest in the model. CDS is doing a great job in raising awareness and I expect that a few more advisers and their clients will start to come forward.

Funding the employee buyout – Part One

At a recent Expert Breakfast Briefing session, John Alexander of consultancy firm Baxendale tackled the issues around funding an employee buyout.

Here, CDS specialist adviser Carole Leslie looks at some of the key points raised in the session.

Employee ownership is a model fast gaining pace – the number of employee-owned firms in Scotland has doubled in four years, and if more of the right kind of finance could be made available, this number would increase significantly.

Alexander said: “It’s chicken and egg. Raising awareness is important, but for an exponential increase in employee ownership there has to be access to the right kind of money. The money comes first.”

  • The equity gap must be addressed

Alexander proposed the solution as being the establishment of high-profile funding sources staffed with visionary fund managers. The Baxendale experience proves that employee ownership presents a reliable, if different, investment. Patient capital is required to nurture the model and that will take a change in behaviour from funders.

  • Vendor financing plays an important role

Properly structured vendor financing can benefit the seller and the business. The outgoing owner will usually be a benevolent and well-informed lender who will take a flexible approach to repayment, ensuring the employees are not overly burdened with debt. An earn-out deal can mean that the vendor benefits from productivity gains driven by the new employee-owned structure.

  • The importance of the employee stake must not be underestimated.

Alexander counselled that employees do not become the main funders of the transaction. This could create funding issues for a future internal share market. However, employee investment is the result of a decision by the employee that their company is worth investing in. Financial buy-in results in an emotional buy-in that reflects in performance.

Next week, we’ll be looking at some of the other issues around financing an employee buyout.

Time to learn from the experts…

CDS Employee Owner Managers Event 21Last week we hosted the first of our expert adviser breakfast briefings, with Baxendale’s  legal director Ewan Hall delving into the world of employee ownership.

Here, CDS specialist advisor Carole Leslie reflects on the key learnings from the session.

At CDS, we have been working with professional advisers on building knowledge of employee ownership (EO) over the past 18 months.  We uncovered a real appetite amongst lawyers, bankers and accountants to learn more so we organised a series of expert breakfast briefing sessions, each one led by a respected specialist in their sector, covering an aspect of employee ownership.

Our first event took place last Tuesday (4 February), with Baxendale’s Ewan Hall – one of the foremost legal advisers in the field of EO in the UK. He has managed more than 20 EO transitions directly and been involved in many more.


Ewan Hall, Legal Director, Baxendale

 The company itself is a major player in the EO field across the UK, with an impressive 50% of their projects in Scotland. They offer specialist advice and investment to help support the creation of sustainable and growing businesses.

During the session – which was covered exclusively by BusinessScotland.com – Ewan spoke about the key decisions and elements involved in an EO transition and talked the audience through the process of an employee buyout (EBO).

 Breaking the subject matter down, Ewan touched on many important points during the 90 minute presentation – here’s a snapshot of the key learnings:

  • An EBO deserves every bit as much consideration as a trade sale or management buyout. The vendor can expect to get open market value for their business, which can be hugely attractive to them.
  • Having a stake in the business doesn’t just motivate people as the new owners of the business; the stability of the EO model safeguards the future of the firm, sustaining local jobs.
  • The vendor also retains considerable control and influence over both the process and the outcome, and can help to put the post transfer structure in place.


  • Vendor financing is a major feature of today’s EBOs and is often the favoured source of funding – many businesses are conservative about taking on external debt.
  • The sector is incredibly supportive, with CDS providing adviser support in the initial stages. CDS will introduce potential EO companies with established EO firms, so they can share their experience  of the process.
  • Scotland is seeing more EO transactions than the rest of the UK – this is possibly due to the amount of support available.
  • EO doesn’t end with the completion of the legal transaction. It is a constant process, with engagement and communication key to driving the benefits of the model.
  • The EO model gives a long term solution to the issue of succession, but it doesn’t mean the owner has to leave the business – they can still be involved post transfer, often in a non-executive capacity.
  • The key to success for the EO model is flexibility, as it can be adapted to suit the vendor and industry.
  • EO is growing and there is a high level of interest. Upcoming changes to tax legislation are likely to make a major impact on encouraging new EO businesses and rewarding employees of existing ones. The changes will enable businesses to pay out bonuses free of income tax.

If you were interested in attending one of our breakfast briefings, we have four more throughout 2014 – for more information, click here.

And for those of you who couldn’t make it, you can watch Ewan’s full presentation on our website or watch a short teaser below:

Co-operative Development Scotland is the arm of Scottish Enterprise working in partnership with Highlands & Islands Enterprise  that supports company growth through collaborative and employee ownership business models.

Keeping it in the family?

Carol LeslieCo-operative Development Scotland (CDS) is working with the Scottish Family Business Association to help family businesses explore employee ownership as an exit route.

CDS specialist advisor Carole Leslie shares the experiences of two heads of family-owned businesses on why this model is such a success.

“Scotland is a brand”, Maitland Mackie told the capacity audience assembled at Strathclyde University for the launch of the International Centre for Family Enterprise at the end of last month.

Seventy-three per cent of Scottish firms are family-owned, employing half the private sector workforce. Family firms are an important feature of the Scottish economy as well as playing a major role in their local area. As Martin Stepek, chief executive of the Scottish Family Business Association says: “Take away family business and there will be no community in Scotland.”  

The International Centre for Family Enterprise is an initiative which brings together the business, academic and professional world to provide a world-class collaborative resource to support this critically important sector. Martin Stepek, alluding to the difficulties caused to his family in running their successful family firm, put it so well: “I want to save family businesses the challenges that we experienced.”  

Maitland Mackie’s presentation was the first in a series exploring the essence of family business.

Maitland Mackie subtitled his talk: “How not to be a cantankerous old father”. He described the challenges and rewards of heading up one of Scotland’s most recognised brands. He emphasised the importance of people; not just family members but also the local families employed in the business. Most of his employees have at least 10 years’ service, many have 20 years plus. 

Maitland described his Damascene conversion from command and control management (or, in his words “Dae fit yer telt”), to a more inclusive and participatory culture. He advised the audience to “involve, involve, involve” employees and to be clear on business objectives. Mr Mackie also spoke of his “no change, no chance” philosophy. There are two rules; get the product right and market it well. 

Mackie’s of Scotland went from dairy farming to ice cream production and, in conjunction with another Scottish family business Taypack, diversified successfully into crisps. The firm is about to launch a chocolate range. Maitland attributed the successful diversification to the strength of the Mackie’s brand name. Family ownership enables Mackie’s to plan for the long term. The firm “lives” on its capital. There are no outside shareholders to consider. The company can focus on doing what it does best; serving the customer.

Much of what Maitland Mackie described resonates well with the experience of employee-owned firms. There is that same fierce loyalty to the brand, the commitment to producing the best product, and delivering the highest quality service. With no external ownership, the business can look to the long term. 

Keeping the business in the family was not an option for Ralph MacLeod, third generation of Lanarkshire-based agricultural feed manufacturers and merchants Galloway & MacLeod. It was important to him that the business remained independent, and the staff that had helped develop the business should have continuity, job security and the business should continue to support the local community. The Employee Ownership Model satisfied all these needs and enabled the employees to take over without incurring personal debt. In December 2010, The MacLeod family shares were transferred to two Employee Trusts.  

Maitland Mackie (left) and Ralph MacLeod (right)

Maitland Mackie (left) and Ralph MacLeod (right)

  His experience is encouraging. “I believe we’re more of a family business now”, he says. “Many staff have long service records and career progression is encouraged through personal development training. Galloway & MacLeod directors no longer have to worry about family succession every generation and the dynamic structure created rewards endeavor and innovation. The staff think and act like owners which is to the benefit of everyone connected with the business.”

“Galloway & MacLeod is a progressive, quality-focused business delivering the best service to our customers. Our people understand that and will all share in the success.” The firm has performed well since the transition of ownership, and has ambitious plans for the future.   

Passing on the business to the next generation is likely to be the preferred route for most family businesses. Maitland Mackie’s three children are now running the family firm. With nine grandchildren waiting in the wings, it looks like succession is solved for a few more years. When the next generation isn’t an option, models which preserve and protect the unique qualities that make the enterprise successful – the relationships, the loyalty, the personality – should be considered.  Employee ownership is one such model.

As Galloway & MacLeod demonstrates, selling the business to employees can be the natural progression. The employees are the people who know the business well, and have a vested interest in its success and sustainability. Like family firms, they provide quality employment and training for local people, in what is a proven business model. 

Family and employee-owned enterprises are critical to the long term prosperity of the Scottish economy. CDS welcomes the International Centre for Family Enterprise to Scotland, and looks forward to collaborating with such an exciting and worthwhile venture.

The second lecture in the series of the International Centre for Family Enterprise will feature Bill Gordon of William Grant & Sons and takes place on Wednesday 18 September 2013. To register for this presentation please email: corporate-events@strath.ac.uk or call 0141 548 2245.

Success is the common currency of employee ownership…

Carol LeslieEmployee ownership is a business model that reaps rewards for companies home and abroad. Carole Leslie, specialist adviser, Co-perative Development Scotland, reports on her visit to America and why success is the common currency between UK and US employee owned firms.

we the owners

 Here at CDS we’re always keen to cast the net as far and wide as possible when it comes to broadening our understanding of employee ownership. Last month we ran a highly successful series of screenings across Scotland of the powerful film We the Owners: Employees Expanding the American Dream,which interviewed American workers. It cut to the heart of what it means to be an owner in your own business. 


I was also fortunate enough to travel to the US recently to take in a conference of employee owned businesses (EOBs) in New England. I was struck by the similarities rather than the differences that exist between British and American models of ownership.

On both sides of the Atlantic, companies owned by their employees are competitive, professionally run, excel in their sector, and operate a form of responsible management with inclusive and transparent governance systems. The result is a more robust and fairer model of business. 

carris reels logoA good example is Carris Reels. Carris Reels designs and manufactures reels and spools for the wire and cable industry, employs 450 staff and has locations across the US and in Mexico.



BillI met with Bill Carris, who engineered the transition to employee ownership in 2008. Bill’s father started the business in 1951, and Bill grew up in the company, taking over as CEO in 1980. Father and son shared the recognition of the importance of the individual, and of community.



Bill looked to find ways to involve employees more in the business. He knew that many companies pursued “emotional ownership” but he wanted his employees to have real ownership of the business. He embarked on what became known as the “LTP” or Long Term Plan, which would not only transfer 100 per cent of the ownership to employees but also 100 per cent of the governance.

Carris Reels 2Herein lies the real challenge. Firms who have gone through the transition, whether in UK or US or anywhere else, would agree that getting the technical elements in place is the easier bit of the business transfer process. Attaining true ownership – hearts and minds ownership – is much more difficult. Speaking with some of the employees and seeing the business results left me in no doubt that Carris Reels has been successful in achieving that transformational culture of employee ownership. 

Carris Reels used a three stage process to implement their ownership culture. The first step was to set out the objectives and vision. Bill Carris was quite clear in what he was looking for – total employee governance to fit with total legal ownership.

Carris Reels

The second step was to make this vision real by building the capacity of employee owners to understand what ownership means for them. This included a wide ranging examination of the business goals and how the company is managed.

A thorough education programme was implemented which explained the risks and rewards, company strategy and operation, and the technical details of ESOP operation.


The third stage examined the context for employee ownership, ensuring that managers and staff have the appropriate skills to manage and work in a transparent and productive environment. As part of this stage, structures for employee involvement and participation were devised and introduced, as was a systematic process clarifying decision-making responsibilities. Each one of these three stages is constantly assessed, reviewed, revisited and new recruits are fully inducted.  

Carris Reels StaffThis kind of programme might appear daunting and time consuming, but the long term benefits are evident. Indeed, Scottish firms such as Clansman Dynamics and the Keil Centre will testify that doing the spadework in the early stages reaps rewards later on and brings success much more quickly. Getting the legal structures and the tax repercussions resolved are both important; but these are only the start of what is a continual process.

The US experience tells us that legislation to support employee ownership in tangible ways is key if we want to see a step change in growth. However, to achieve that transformational change takes sustained and considered application. In many ways, the technical architecture is just the vehicle.

Achieving true employee ownership takes courage and conviction. But US companies like Carris Reels and native examples like Woollard & Henry and Accord Energy, clearly show the results are positive and far reaching.

Co-operative Development Scotland is a Scottish Enterprise subsidiary, established to help companies grow by setting up consortium, employee-owned and community businesses. It works in partnership with Highlands and Islands Enterprise.

This website uses cookies to ensure you get the best experience during your visit.