Leave your company in good hands

If you’re thinking about selling up but want a simple solution with a ready-made buyer to carry on your legacy, then Employee Ownership could be the answer.

You’ve built up your business and have a great team, but now it’s time to move on with life outside of your business. With SMEs accounting for 99 per cent of businesses in Wales, selling to a competitor or getting bought out by the highest bidder could be unpalatable and could mean saying goodbye to your brand, seeing your workforce dismantled or product line changed.

Needless to say, for many SMEs and family businesses in Wales, the traditional exit route of selling to a trade buyer isn’t always attractive. However, there is another succession option – Employee Ownership – which is one of the fastest growing form of business ownership in the UK. Some of Wales’ leading Employee Owned companies include independent TV production company, Cwmni Da, Itec Training Solutions and Tregroes Waffles.

A sale to employees means that the people who know the company best are in control, relationships are maintained and the business stays in the area. The benefits of Employee Ownership are acknowledged by politicians of all persuasions, as evidenced by the tax incentives introduced in 2014 that mean if a controlling stake is sold to an employee trust, then that transaction is free of capital gains tax.

But the benefits go beyond any tax breaks. There is so much flexibility in Employee Ownership models that the structure can be designed to suit the business. The exiting owner can determine the pace of their exit from the company and may even want to remain in a non-executive role, meaning disruption is minimised. Rather than having to go through the time, effort and expense of selling to someone they don’t know, Employee Ownership allows business owners to leave their business in the hands of their employees. This is particularly useful for family-run businesses, where there may not be someone with the right skill set available to take over. The business owner and employees will also agree to a fair market price using an independent professional valuation, avoiding the potential of extended negotiations when selling to a conventional buyer whilst ensuring the vendor gets the price they want.

Employee Ownership Wales consists of a team of specialist advisors providing ERDF funded guidance and support on Employee Ownership.

Project Manager, Nicola Mehegan, said: “We understand that selling a business can be a very difficult decision. We work with business owners in Wales to help identify the best approach for them and their business via our free Options Appraisal. If they decide that Employee Ownership is for them, we then oversee the design and implementation of the transition – all fully-funded and free of charge.

“It takes time to prepare and implement ownership so we would urge business owners in Wales to take advantage of our fully-funded service to get prepared early and ensure all options have been considered with their succession planning.”

Clearly, Employee Ownership is an option that is worth considering by business owners in Wales as they contemplate succession. It won’t fit with every firm, but where it does, the flexibility it allows means the structure can be shaped to suit the aspirations of the vendor as well as the future plans of the firm. The benefits are proven.

Other News