Leave your company in good hands or give your start-up a stronger team
If you want to sell your business or are looking to grow your business and reward and retain staff, Employee Ownership is an innovative option with proven commercial benefits. By transferring ownership to your employees, you can enjoy the maximum value of your business and improve business performance whilst also ensuring your legacy will last long into the future.
What is Employee Ownership?
Employee Ownership is where a business is totally or significantly owned by its employees.
In 2014, the Government announced two new tax reliefs to encourage more companies to adopt Employee Ownership. It is now the fastest growing form of business ownership, offering a significant number of benefits for businesses, their employees and the owners looking at succession planning.
With research showing that employee-owned businesses are stronger performing with employees who are more engaged and committed, Employee Ownership is also becoming increasingly popular with entrepreneurs creating new businesses, to help attract and reward talented employees and drive business growth.
Being an owner does not make every employer a manager: like any successful company, one owned by employees still needs a professional and effective management team. But its managers are far more likely to be paddling with the flow, supported by staff who are committed to their company’s success because they have a stake in it.
Employee Ownership can take a number of forms:
Who is it for?
All kinds of businesses can benefit from employee ownership, including yours. Plus, there can be significant tax breaks through sale to an Employee Ownership Trust and for some direct ownership share schemes, including those based on share options. The Government has recognised the value of Employee Ownership to the economy.
You’ve built up your business and have a great team, but it’s now time to move on. Selling to a competitor or getting bought out by the highest bidder can be unpalatable and might mean saying goodbye to your brand, seeing your workforce dismantled or product line changed. Selling to your employees benefits both you, and them. They know your business best. They don’t need the funds upfront; you can be bought out against future profitability to a schedule that suits you. Including blending this with some immediate borrowing or using surplus cash. So, your short-term needs are met as long as having long-term security. By selling to your employees, you can also negotiate your future involvement. Be an adviser, be on the board, pop in for a cup of tea every Friday or say goodbye altogether.
Many dynamic start-ups are choosing this model because it cements an engaged culture from the off and gives them a competitive edge in attracting and retaining talented employees. Businesses in need of a boost can look to employee ownership as a way to galvanise and refocus. And not-for-profit organisations and charities can use employee ownership to make their team feel more valued and give employees a voice.
You’re aware that your employers are thinking of selling. You want to safeguard your job and have a say in key decisions. Why not talk to them about Employee Ownership? This model will not only protect jobs but can also enhance business prosperity whilst keeping money in the local community. It will also empower you and your colleagues and reward you with an opportunity for business ownership.
The Benefits of Employee Ownership
Minimal disruption for your business, particularly if you are advised by specialists who can support you with governance, shares and what structures you need to put in place.
No need to find a buyer. Your employees will already understand the potential of your business and will pay a fair price.
Tax breaks that benefit both seller and employees. For example, if an Employee Ownership Trust is used, gains of up to £3,600 p.a. tax-free can be made as part of a profit sharing plan.
You are in a strong position to negotiate your exit terms and you can fashion a model that suits both you and the business.
Employee Ownership fosters agility, innovation and adaptability – all key attributes that will help to future-proof your firm against upcoming risks and challenges.
Jobs are safeguarded, relationships with contractors and suppliers are uninterrupted, and employees decide how the business should develop, according to their wishes and plans.
Your valued employees are rewarded in a tangible way for loyal service. This can be very gratifying for a business owner, particularly when dealing with long-standing team members.
Your business culture, ethos and brand is more likely to be valued by the new business owners, and to be carried forward into the future.
You will be able to negotiate the sale of the business at an agreed pace, and you can agree upon what level of involvement in the business, if any, you want to maintain.
Employee Ownership boosts productivity and growth. It is a great choice if you want your business to continue to blossom and thrive.
When to consider Employee Ownership
Employee Ownership can be particularly attractive if you are:
“True succession planning should be part of business as usual rather than a separate consideration.”
There is no time like the present to start your succession or ownership planning. It takes time to prepare and implement changes in ownership. Why not take advantage of our fully-funded service to get prepared early and ensure all options have been be considered?
Contact us now for a fully-funded options appraisal
Our fully-funded Options Appraisal will explore how Employee Ownership can work for your company. It includes: