Tag: employee ownership (Page 2 of 3)

Shared learnings as Basque Country visits Scotland

December 16, 2014 /

Sarah Deas resizedScotland is home to a growing number of employee-owned businesses and recently played host to a Spanish delegation keen to learn about promoting the ownership model.

Here, CDS chief executive Sarah Deas discusses the visit and the insights gained.

A few weeks ago I was delighted to host a visit by the Provincial Council (government) of Gipuzkoa, an area of the Basque Country to the east of Bilbao in northern Spain. The delegation was seeking to learn from our experience in promoting employee ownership.  With Gipuzkoa being home to the world famous Mondragon Corporation , it was an honour to host such a visit!

The Provincial Council aspires to create a ‘socially responsible territory’. It believes that economic and social development is increasingly dependent on talent, creativity and innovation. As such, the council is focusing on ‘workplace innovation’. This is the development of new relationship models based on participation – as a driver of productivity and quality employment.

In developing policy to promote worker participation, they are researching the relationship between participatory business models and regional socio-economic health indicators. And, through international visits, such as this one to the UK, they are looking to identify best practice from both a policy and business perspective.  This will inform the design of tax incentives and wider support.

photo

Sarah, third from left, with members of the delegation

Oscar Usetxi Blanco, Director for the Promotion of Innovation and Knowledge, Gipuzkoako Foru Aldundia was accompanied by colleagues from the innovation agency and ASLE (lead organisation for worker owned companies).  The study visit was organised by Ann Tyler, a UK solicitor with extensive experience of employee ownership.

The delegation visited two of Scotland’s most well established employee owned businesses; Aberdeen manufacturer Woollard & Henry and Fife paper producer Tullis Russell. Here theygained valuable insights into workplace culture and practices. Our Spanish friends very much appreciated the opportunity to see employee ownership in action, and I thank both Woollard & Henry and Tullis Russell for welcoming them.

Reflecting on this visit, it really is interesting to see the growing interest in employee ownership across Europe.  However, the driver is different to that which inspired Mondragon Corporation. Today, ownership succession is the trigger, with sustainability, productivity and socially responsible employment being the goals. These are becoming priorities across the developed world.

Hopefully the delegation from Gipuzkoa found the visit a valuable one and I look forward to seeing employee ownership flourish in the region.

Page\Park enjoys successful first year of employee ownership

December 12, 2014 /

Page Park Architects 07Just over a year ago, Glasgow-based architecture firm Page\Park took the exciting step of becoming an employee-owned company.

Since then they have gone on to enjoy a successful 2014. In addition to increasing their workforce, the company last month won a GIA Design Award for its work in the revamp of the city’s Kelvingrove Bandstand.

They were also Highly Commended by the Philip Baxendale Awards as an Employee Ownership Rising Star.

As they look forward to building on their success the New Year, watch our video to find out how they addressed their ownership succession issues by adopting employee ownership.

Scottish success stories at employee ownership conference

December 5, 2014 /

????????????The Employee Ownership Association held its annual conference in Nottingham last month, with over 500 delegates attending.

Here, CDS specialist adviser Glen Dott takes a look back at the event and recounts some of the highlights.

This year CDS took seven clients to the Employee Ownership Association Conference. No sightings of Robin Hood – or even a forest – but it was a great learning experience for those considering employee ownership. Who better to ask than those who have ‘been there done that’? With over 500 delegates in attendance there were plenty of ‘doers’ and our contingent had a number of networking possibilities.

On the Monday evening we attended the Philip Baxendale Awards, where ‘the best employee-owned organisations are recognised in a tremendous celebration of excellence’. From a Scottish perspective, Page\Park Architects was Highly Commended as an Employee Ownership Rising Star while Fred Bowden Snr, chairman of Tullis Russell was awarded the The Philip Baxendale Fellowship for his outstanding contribution to employee ownership.

Employee Ownership AssociationIain Hasdell, chief executive of the EOA, welcomed us to the conference and illustrated how far employee ownership has come in a relatively short time. The icing on the cake for ‘Team EO’ in 2014 has been the tax breaks afforded to owners selling into Employee Ownership Trusts (EOTs) and the tax-free bonuses now payable to employees of EOT-controlled businesses. In Scotland we are already seeing the fruits of this legislation with EOTs in operation at Mike Stoane Lighting and David Narro Associates and more deals in the pipeline.

Two strands of sessions followed for ‘newbies’ and those already in employee ownership.  In between, we took the opportunity to link up our guests with relevant advisers and like-minded businesses, before keynote speaker Mike Thompson of Childbase explained why his company is moving to a Trust-only model. Surprisingly, external investors currently share most of the profits but a deal has been struck where an employee trust will buy out external investors and also the founding family. The primary advantage will be that future profits will be shared exclusively by employee owners via the recently introduced tax-free bonus.

The conference came to an end with John Lupton of 150-year old Tayport firm Scott & Fyfe telling us of their remarkable transition from family-owned jute business to a modern, outward looking, innovation led employee-owned industrial textile manufacturer.

This story illustrates that Scotland has much to be proud of and we certainly lead the UK charge in adoption of the EO model. We have every reason to believe our clients will join the employee ownership fold and we aim to bring an even bigger contingent next year.

Benefits of employee ownership are clear

December 2, 2014 /

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.

Highland Home Carers benefits from employee ownership

October 24, 2014 /

Stephen Pennington   Highland Home Carers held a conference last week to mark their 20th anniversary and their 10th year of employee ownership.

It was a fantastic event, attracting a TV personality, a Cabinet Minister, an MSP, the NHS Director for Adult Social Care as well as a wealth of key figures from the sector.  Here, HR administrator Laura Dobinson describes the day.

This is the most high-profile event we have run and we were all a bit nervous as to how it would work out. I’m delighted to say that everything just slotted into place.

Nick Boyle, the founder of Highland Home Carers (HHC), launched the event with an inspiring speech explaining why he sold the business to the employees.

HHC was set up to deliver the highest possible standards of care, enabling people in the Highlands to remain in their homes, in their local communities, for as long as possible. By moving the business to employee ownership, HHC’s unique ethos is secure and we can focus on quality of care.

Managing Director Stephen Pennington (pictured above) outlined how HHC is trailblazing the way adult social care is delivered in the UK. There is talk from Westminster of an integrated service with councils and the NHS collaborating rather than working in silos – this is already the case in the Highlands. Stephen explained how the employee-owned model provides a platform for HHC to build a stable and strong company.

Attendees could choose from a number of workshops to attend which covered a wide range of topics – money management, wellbeing, wills and trusts, personalisation of care, social exclusion.

Danny Alexander

Chief Secretary to the Treasury, and local MP, Rt Hon Danny Alexander, joined us for lunch and chatted to carers, service users and guests. In his keynote speech, Danny recalled opening HHC’s Stadium Road office in 2006, and was delighted to follow the progress of the company.

He said it was employee-owned companies like HHC which motivated him to introduce the recent legislation offering tax breaks to encourage more employee ownership of businesses. He told the audience that HHC is one of the best examples of employee ownership in the UK – a superb accolade!

The event concluded with a lively panel session. Aggie Mackenzie, from TV’s How Clean is Your House and Storage Hoarders talked about how she couldn’t get anywhere when organising care for her mother until she contacted HHC. She was full of praise for the service and said she knew their business model was different; this conference helped her understand why.

Aggie MacKenzie

Feedback so far has been great, with some attendees asking us to make it an annual event. It was so good to get together with friends and supporters to talk about the issues surrounding care, and employee ownership. It was particularly encouraging to hear how highly regarded HHC is by our key stakeholders.

Care is a challenging sector to work in. As employee owners we are immensely proud of what we do. At HHC we know we are part of something special. Looking forward to the next 20 years – and beyond!

Hear about Scott & Fyfe’s journey to a secure future

September 23, 2014 /

Katrina MacKay is chair of the Employee Forum at Scott & Fyfe, the next host company of our Successful Succession series, which takes place on September 30th at their facility in Tayport, Fife.

Here, Katrina explains what employee ownership means for her company.

I love my job and working for Scott & Fyfe.  It is rewarding being part of a company that has such a rich history, with a global reputation for quality and innovation.

Scott & Fyfe 06Yes, we operate in a challenging market and we are constantly looking at how we can be one step ahead in anticipating and meeting our customers’ needs.

When we were told about the move to employee ownership two years ago, I have to confess I didn’t have much of a clue as to what it meant – and I think that’s true of almost all of my colleagues.  We did suspect something was afoot.  I guess like most workplaces, you can sense when changes are imminent.

We were all issued with boarding cards, indicating we were going on a journey.  The announcement of the change in ownership was followed up by a series of workshops that explained more fully what employee ownership is, and what it would mean for Scott & Fyfe.

A specially designed website, Tayport Works, explained the mechanics of the new structure more fully.

The biggest concern in the minds of employees was that the family would close the business, or sell to an overseas company.  Scott & Fyfe is such an iconic company in this local area that this would have been bad news.

Scott & Fyfe is a family business in the widest sense; we all felt part of the family.  As well as the employment going, we would have lost that team spirit that makes going to work worthwhile.

For me, the most positive outcome of employee ownership is that our future is secured in a stable business structure that will allow us to prosper and grow.

I’m thrilled we’re part of the CDS Successful Succession campaign. It will be a pleasure to tell our story and show people around our site.  We are still on the first stages of our journey, but I’m convinced employee ownership was the right move for Scott & Fyfe.

The event on September 30th is an opportunity for us to show other businesses what can be achieved.

Employees can share in business benefits

August 27, 2014 /

Rodger CairnsGiving employees a stake in the organisation in which they work can be a powerful tool in achieving real staff engagement.

Here, Rodger Cairns, partner at law firm Shepherd & Wedderburn and an expert on share schemes and employee remuneration, tackles the subject.

A share represents a tangible interest in the business and when employees see the link between effort and reward, the results can be remarkable.   However, any scheme has to fit the specific circumstances of the business and be designed to offer the potential of real advantages to employees.

If employee share participation is something that is of interest, it makes sense to do it as tax effectively as possible and there is a variety of HM Revenue & Customs ‘approved’ arrangements that can be used, many of which were made more generous by legislative changes that came into force earlier this year.

The HMRC-approved Share Incentive Plan (SIP) is used by many companies to distribute shares.  The SIP allows the company to award shares free of charge to employees and enables those same employees to buy shares via payroll.  The SIP also offers tax advantages if certain conditions are met. The Finance Act 2014 raised a number of the thresholds for SIPs, thus increasing the opportunity for employees to benefit from participation.  The Act also doubled the maximum monthly saving contributions allowable under the other HMRC-approved “all employee” arrangement Sharesave Schemes.

Enterprise management incentives (EMI) continue to be an effective way to reward executives in smaller businesses, although there is no reason they can’t be offered to the entire workforce where appropriate. As long as certain conditions are satisfied, income tax is not payable on exercise of EMI share options. Instead, participants will pay capital gains tax on disposal of shares, based on any gains above exercise cost.

There is also normally a Corporation Tax deduction available on the implementation and operation of employee share schemes.

However, implementing a scheme is rarely sufficient on its own to deliver the engagement and productivity benefits.  The key to aligning employee effort with company objectives is by communicating the advantages of the plan, how performance is delivered and how each employee contributes to the results.

Finally, it is worth noting that HM Treasury recently released a consultation on a new employee shareholding vehicle that it hopes will be a straightforward structure that can be used to facilitate the operation of share incentive schemes and internal share dealing markets.  Any simplification of the various processes surrounding share participation by staff is always welcome, although – as is often the case – the devil will be in the legislative detail.

Rodger will be leading the fourth in our series of employee ownership expert adviser briefing breakfasts and will be focusing on share schemes.  The event takes place on 10th September at the Apex Haymarket Hotel, Edinburgh between 8am and 10am. 

Myths busted at Co-operative Business Development Seminar

August 22, 2014 /

Jim_Maxwell,_Business_Development_Manager,_Co-operative_Development_Scotland_resizedCo-operative Development Scotland’s business development manager, Jim Maxwell, was a guest of Glasgow City Council on Wednesday, speaking at its second Co-operative Business Development Seminar.

Held at the Orkney Street Enterprise Centre, Jim was asked to talk about the use of consortia and the growth of employee ownership. Here, he gives his thoughts on the event.

Glasgow City Council’s commitment to co-operative working in the city was crystal clear on Wednesday when I was invited to speak to around 25 of the city’s business advisers about consortium working and employee ownership.

It was so encouraging to see the interest shown in both these models.  Glasgow’s front-line advisers clearly do feel these are concepts worth introducing to suitable client businesses.

This was a perceptive (and quite challenging!) audience with searching questions about the consortium model and how it provides a collaboration structure with the minimum of risk and bureaucracy.

Interest quickly focused on procurement and how the model is used by groupings of businesses to bid for larger contracts they couldn’t win individually. In fact joint-tendering is the most common use for the consortium model and much of the free support CDS provides is in setting up tendering consortia.

Consortium-based tendering also fits well with Glasgow City Council’s procurement policy and public procurement generally, which aims to achieve local community benefit wherever possible.

The annual CDS Collaboration Prize always produces a rush of interest from businesses interested in forming consortia. This year it launches on October 1 so watch our website for details.

With prizes of £10k up for grabs, my guess is we’ll be receiving a fair few enquiries via the Glasgow business advisers!

The discussion on Employee Ownership turned out to be rather a ‘myth-busting’ session with advisers raising the kind of questions they expect from their client companies, such as:

Q. What if the employees can’t afford to buy the business?

A. The business itself purchases the owner’s shares, not the employees

Q. What if the owner feels the business cannot be run successfully by committee?

A. Employee owned businesses are not run by committee, they have normal management structures.

Q. What if the owner isn’t ready to exit yet?

A. The exiting owner controls the whole process of transition, including the timeframe.  Most successful employee buy outs are planned well in advance.

the futureInterest also focused on the (considerable!) new tax benefits for owners when they pass a controlling interest to an employee trust and how company performance invariably benefits when employees have a meaningful stake via employee ownership.

The steps being taken by Glasgow City Council to ensure local businesses derive benefit from the “Co-operative Council” agenda are exemplary.

The strength of commitment is clear in the overwhelming response to the second stage of their co-operative support grant scheme and the recent announcement of a £1million budget to support business ownership transfer.

Practical steps like these are a real boost to co-operative working in Glasgow, and very much to be commended.

Trust me – employee ownership works for Highland Home Carers

July 22, 2014 /

Jocelyn-Mitchell-1Highland Home Carers was established in 1994 to provide the first independent domiciliary care and support service in Inverness and the wider area. The business enables many people to remain in their own homes when otherwise they might have been moved into institutional care. The company increasingly works in partnership with NHS Highland to improve the quality of health and social care services in local communities.

Ten years ago, Highland Home Carers became employee-owned. Here, Jocelyn Mitchell – care worker and Chair of the Trustees – explains how the trustees ensure the company is run properly.

The trustee role is an important one within Highland Home Carers.  We represent the majority shareholding and it is vital that we hold the board to account – just like shareholders in conventional companies.

It is not our job to run the company, but we do have to sanction major decisions that could affect the long term stability of the business.  A few years ago the board restructured the company’s loan, opting to move the debt to a more favourable lender. This meant higher repayments in the short term, but would result in us being debt-free in a few years.  As trustees, we had to be satisfied that the impact of higher payments had been fully considered and that it would be for the company’s long term benefit.

We have grown significantly in the past two years. With 350 employees covering 8069 square miles, quality of delivery of care is central to all we do.  One of the issues we wanted to explore with the board was how we could ensure our high standards would be maintained when we were undergoing a period of growth. Our MD fully explained the measures put in place – as employees, we are able to see the consequences of board and management decisions.

Our board is superb, with a mix of management, elected employees and two experienced non-executives.  We haven’t had to exercise our veto over any decisions but there is no complacency. We continue to challenge and ask for explanations.

We are quite unusual in that none of our directors are trustees – how could we hold the board to account if some of us were involved in board decisions? There are six trustees – three elected by our colleagues and three appointed by the board. Two of the appointed trustees are also employees. The sixth is an independent trustee who is not an employee and supports us in our role.

There is a myth that if employees own the company then they will make decisions in their own interests and lose sight of the sustainability of the business.  That can’t happen here. We have a responsibility to current and future employees. This year we are celebrating our 20th year, 10 of which have been as an employee-owned company.  As trustees, it is our job to ensure we are still here for the next 20 years and far beyond, while still providing the best care and being a great place to work.

Building to a better future

July 9, 2014 /


Page\Park celebrate EO DayGlasgow-based architecture firm Page\Park hosted the third event in our programme of Successful Succession Seminars  on Friday, July 4 – Employee Ownership Day. 

Here, Page\Park employee owners David Page, Brian Park, Karen Pickering and Eilidh Henderson give their views on how employee ownership has impacted on the company.

Brian Park, founding partner: “There are three principles central to everything we do: creativity, integrity and making a difference.  That’s what Page\Park is about. A sale to a larger firm might have compromised that. An important benefit of the move to employee ownership is that the Page\Park brand is protected for the long term.”

David Page was part of the transition team who met regularly throughout the business transfer process. “We invested a lot of time in the transition to employee ownership, and it was time well spent. “We believe we were investing in our future. The founders had to wean themselves away from ownership and control, and the employees had to learn more about the business aspects of the company.

“We devised a structure where all employees get involved in at least three business areas as well as their architectural projects.  This means that we have a greater understanding of the business as a whole and are not solely focused on our own projects.”

Karen Pickering has been an employee of Page\Park for 22 years. Karen described how the business operates differently now all employees are owners. “Under the old partnership structure, there was a tremendous pressure on the founders to make the business work; to ensure the books balance, the order book full, we have enough resource to manage our projects.

“Now that we all own the business, the responsibility is shared. We are all much more mindful of costs than we were before and we all know how important it is to win new business.”

Page Park Architects 11“We operate with a flat structure and match each job to people’s talents and interests,” says Eilidh, an employee of 11 years. “It’s quite usual for junior staff to attend high level meetings; there is no top or bottom, we are all in it together.

“This works for us.  We have no need to advertise for recruits.  And once people join, they stay.  This is a great place to work.”

The profession agrees – Page\Park was awarded best employer in the AJ 100 Awards, the architectural sector’s Oscars. The move to employee ownership is about much more than a change in legal structure for the employees of Page\Park.

Eilidh is convinced the model fits with the firm. “There is a strong sense we are creating something quite powerful and dynamic.”  Karen agrees.  “Now we are employee-owned, we are architects of our own destiny.”

A route for successful business and business success

July 4, 2014 /

EO_logo_2014-01Today, July 4, is Employee Ownership Day – an opportunity  for companies that have chosen this model to celebrate their success and spread the word about its benefits.

Co-operative Development Scotland’s chief executive, Sarah Deas, tells us why it is worth celebrating – and why business owners looking for a succession strategy or even a different way of working should take notice.

It may only be in its second year, but already Employee Ownership Day has become a key date in the calendars of employee-owned businesses across the whole of the UK.

There is good reason for this. Employee-owned businesses have something to celebrate; many  have seen real, tangible benefits from the model. Staff work closer together, there is a genuine feeling of a common goal and productivity increases.

Today, Page\Park, one of Scotland’s newest employee owned companies, will host our EO Day celebrations,  A well-known architectural practice, Page\Park is another great example of how the model not only offers a sound succession option but also is an ideal model for professional practices.

Founders David Page and Brian Park have no immediate plans to leave, but they wanted to ensure that the company’s long-term future was safeguarded – and employee ownership was the best option for them. This was no knee-jerk decision either.

The firm was recently named the UK Employer of the Year in theArchitectural Journal Awards. So its transition is yet another example of how Employee Ownership isn’t just a successful route for business, but it’s a route for successful business.

There are other EO Day events taking place across Scotland today – all highlighting the value the model plays not only to individual businesses, but also to Scotland’s economy.

We’ll be tweeting live from the Page\Park event on @cdscotland. Do join us and  share your own employee ownership success stories.

EOA Network Scotland gets off to successful start

June 27, 2014 /

Deb OxleyThis week marked the inaugural meeting of the Employee Ownership Association Network Scotland, with representatives of employee-owned businesses discussing how they can work together.

Here, Deb Oxley, Director of Membership at the EOA, reflects on a successful day for the network.

As an organisation that champions the virtues of engagement and communication, it is only appropriate that this week the EOA facilitated the launch of a new EOA member network in Scotland, as part of a UK-wide roll out across its membership.

With more members than ever, increased demand to network and a universal desire to learn and improve – these networks have the potential to offer significant added value to EOA members – and the wider employee ownership community.

Of course any network is only as strong as those that support it and so we launched this network in Scotland clear that it has to be member-led – just like the businesses that are part of it, which are, in the main, employee-led.

So it was great that not only was this launch hosted by EOA member Tullis Russell, and supported through facilitation by EOA member The Coverdale Organisation, but that we had eager volunteers from other EOA members offering their facilities and time to take forward the network.

But of course this new network must seek to fill a gap and to add more value to what already exists. And so it was great that the group affirmed that as it delivers the agreed shared objectives for the network, that these will aim to complement the existing activity of the EOA including the Annual Conference, EO Day and other learning events – as well as the awareness raising activity of CDS.

Probably of most importance is that there was keen support for this network to be a channel to inspire and enthuse the thousands of ordinary employee owners across Scotland.  It was agreed by everyone that it is these people that are essential  to businesses realising the many benefits that employee ownership can deliver, from increased productivity and profitability to improved engagement and staff wellbeing.

A member-led network that enables improved networking and trading, provides a route for more learning and problem solving and which inspires and enthuses employee owners – a challenging task but definitely achievable in a sector of the economy renowned for its innovation and resilience.

Network to bring employee-owned companies closer together

June 24, 2014 /

Sarah Deas resizedThis week sees representatives of employee-owned businesses and other parties gather at Tullis Russell for the first-ever Employee Ownership Association Network Scotland, part of a national rollout by the EOA.

Here, Co-operative Development Scotland chief executive Sarah Deas discusses the potential benefits of the Network.

Scotland’s first-ever EOA Network Scotland is an exciting prospect which will allow businesses operating with a similar ethos to gather, share common problems and work towards common goals – regardless of the industry each individual business represents.

This first gathering of the Network, held tomorrow morning at Tullis Russell’s paper mill, is an important step. Deb Oxley, director of membership at the EOA, will chair the event and lead discussions on the day, with the overall goal being to agree the purpose of the Network and decide how it will develop in years to come.

Staff at Tullis Russell

Staff at Tullis Russell

To those attending on Wednesday, remember this is your chance to have your say and influence how the network will work for you.

Just as exciting is the venue. Not only is Tullis Russell an employee-owned company, but the first EOA gathering will be held at the company’s recently opened eco-education building, the Tullis Russell Environmental Education Centre – or TREE, for short.

TREE acts as a terrific education space, designed to motivate the local community to take action to help secure a more sustainable future, as well as provide a first-class conference and meeting space for local businesses. It’s a fitting venue.

Employee Ownership Association

Co-operative Development Scotland will be there – and we are delighted to be. The establishment of the EOA Network Scotland is an important step towards providing a solid foundation for existing employee-owned companies. It will also provide further reassurance to those organisations considering employee ownership as a business model that it works and help is there for them.

Most of all though, it will strengthen the voice of employee-owned businesses and that can only help drive policy and influence decision makers in future years.

The route to a successful succession – part two

June 20, 2014 /

????????????????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.

The next Successful Succession event takes place July 4 at Page\Park Architects in Glasgow.  For more information and to register, click here.

The route to a successful succession – part one

June 18, 2014 /

The second of our “What’s Next” events in our Successful Succession programme, was hosted by Aquascot in Alness. 

One local business owner currently considering a succession strategy for his business attended to see how employee ownership may work. Here, he sums up his thoughts from the day. 

I’m interested in ways to make our business more sustainable for the long term and provide an eventual exit solution for the current shareholders.  As a business, we are constantly looking at ways to improve and reviewing our ownership structure is part of that.

I’d like to find a model that rewards and engages our staff for the contribution they make to the success of the business. I’m intrigued at how businesses owned by their employees appear to achieve much higher levels of staff engagement and productivity improvements.

???????????????????????

Our Scottish Enterprise account manager drew my attention to a programme run by Co-operative Development Scotland, which is showcasing employee owned firms around Scotland. I attended two events and found they greatly helped my thinking.

The first visit was to Galloway & MacLeod, who manufacture and sell agricultural feed. This is an impressive business.  It is innovative, high tech, and focused on growth.  A family firm, and significant employer in the area, a trade sale would have meant a likely relocation.

Selling to the employees means the business stays where it is, providing opportunities for local people.  The honesty was refreshing; they admitted that initially share uptake was low, but had now reached over 90%.

aquascot

The Aquascot visit was thought provoking.  This is an innovative company, very grounded in their values.  They strive to be a great place to work – and aim to have fun while “doing the right thing well”.  The MD, Dennis Overton, admitted a trade sale would have been quicker, simpler and easier, but did not fit with the strong partnership ethos.

It was good to hear the bankers who attended stress they are quite comfortable with employee owned business models; succession management is critically important, if the management team disappear, the business is exposed.  Employee ownership is a solution that promotes continuity.

That was the year that was – a look back at 2013-14

June 16, 2014 /

Sarah Deas resizedCo-operative Development Scotland had a stellar 2013/14, working with co-operatives and employee-owned businesses throughout the country.

Reviewing progress, chief executive Sarah Deas outlines how the results demonstrate the potential for growth in the coming years.

During 2013/14, Co-operative Development Scotland supported 36 new ventures and buyouts across the country, nurturing successful business collaboration and succession.

consortia infographic

We helped establish 19 new consortia covering key sectors, including tourism, creative industries, forestry and renewables. This will directly benefit more than 150 businesses in the first year – with that figure expected to increase to more than 350 over the next three years as the influence of the consortia grow.

We also helped eight new community ventures to get off the ground and are currently advising 91 Scottish companies that are interested in the employee ownership model as a succession option.

The figures, published in our 2013/14 annual review, demonstrate clearly that co-operative and employee ownership models are proving attractive options for businesses as the benefits become more widely known.

It is for that reason we are confident we will meet our target of a 10-fold increase in employee ownership over the coming decade, as well as helping to establish a further 350 new co-operatives in the same period.

the future

Others are keen to learn from our approach; last year we advised the Malawi Trade and Investment Centre on Scotland’s approach to co-operative development.  We also participated in a project led by the Flemish Government to promote co-operative entrepreneurship across European member states.

Looking forward, we will continue to work closely with Scottish Enterprise and Highlands and Islands Enterprise, as well as key partners including Business Gateway, industry bodies, membership organisations and professional practices, to raise awareness, provide advice and influence policy.

We are determined to build on the successes we have had over the past year – and the enthusiasm the model has been shown so far only whets our appetite to spread the message even further.

Funding the employee buyout – Part Two

June 11, 2014 /

CDS Employee Owner Managers Event 21Last week, we looked at the issues raised by John Alexander of consultancy firm Baxendale on funding an employee buyout during his presentation at a recent Expert Breakfast Briefing session.

Carole Leslie, a specialist adviser with CDS, continues her look at the points raised.

Alexander, who has been responsible for structuring more employee buyouts than anyone else in the UK, was clear in his view. There is a significant opportunity for the financial sector to fill a funding gap for potential employee-owned businesses.

The gap is for patient capital, which accepts that investment in employee ownership can provide good reliable returns – albeit over longer periods.

Among the other issues identified were:

Longevity and steady performance are two proven benefits of employee ownership.

The model doesn’t fit with the ‘scrag it and sell it’ short term model.  Many funds prefer a 3-5 year sale of businesses that can demonstrate a “hockey stick” profit forecast, selling at the point optimal value is achieved. While a valid model for investment, it relies on undermining ownership.

Employee Benefit Trusts are an important, but often misunderstood, element in the employee-owned structure. 

Securing the majority of shares in the Trust reduces the requirement to finance the internal share market. The absence of external shareholders for trust-held shares means cash that would have gone out in dividend can be distributed to employees.

Whilst Capital Gains Tax relief may not convince owners to sell to employees, it will ensure the option is on the agenda.

The tax relief is not insignificant, but unlikely to swing the deal, according to Alexander.  What the relief does do is put the onus on advisers to inform business owners that the option exists.

There are too many misconceptions surrounding employee ownership.

Too often employee-owned businesses are presumed to be less than commercial, when in reality they are anything but.  These are good businesses which happen to be owned by their employees.  Indeed, employee-owned firms report higher productivity and more innovation than conventionally structured firms.

The latest Co-operative Development Scotland employee ownership event is taking place at Page\Park’s HQ in Glasgow on July 4 – Employee Ownership Day. To find out more, click here.

Funding the employee buyout – Part One

June 6, 2014 /

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.

« Older posts Newer posts »

LINKS

SOCIAL MEDIA

Twitter Linkedin

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

ACCEPT & CLOSE
DECLINE