24 DEBATE
Richard Few
Shakira Musarat
Mathew Haslam
Employee
ownership is not philanthropic.
There are still many commercial reasons why it works
Mairead Platt Continued from page 23
If you want to leave a legacy then it is more about what you have created and wanting that to carry on after you. We’ve talked about cash out and profitability, the evidence is that in Employee Ownership Trusts (EOTs) once the staff are more engaged, the business is more profitable, A pay out could actually come a lot quicker.
Once staff get that tax-free bonus and can see their work directly results in something coming back to them and they are becoming part of the business, they start coming up with ideas. They start doing things because they feel like the business is theirs. It becomes almost self-fulfilling in the sense that everybody has that buy-in.
Mairead Platt: When it comes to considering your business exit, the sooner the better. If you leave it too late you’re narrowing your options. Over the last few years priorities have definitely changed. People are looking to step away sooner than they originally planned.
If you say ‘I want to retire tomorrow’ there are not as many options open to you. If it’s a management buyout it is making sure the management team are ready. If it is an EOT or a trade sale you need to make sure your business is in the right state. Get all your ducks in a row.
The pandemic has changed business owners’ priorities. People are working from home and enjoying the work-life balance. For a lot of owners there has been a gradual stepping away, still being involved but not as heavily and passing some of the responsibilities down. You can have a hybrid of almost any business exit, you can structure it any way.
Oliver Smith
Jenny Pape
The difference between a trade sale and a management buyout is there’s less risk on the exiting business owner in an MBO. The management team are already heavily involved and they should understand the business and how it’s run.
As the EOT sector has grown and we’ve been discussing it with clients we get the response ‘it sounds too good to be true’. You have to try and get their heads round it, explaining how it works.
The ethos of rewarding your employees is key, especially in this climate where it is really difficult to retain staff. For many employees it is not just about the salary, it is about the values of the business. Employee ownership fits the bill, in terms of staff retention and incentives.
Jenny Pape: You need to prepare yourself as early as possible in any sort of sales process that you might be considering or contemplating.
Joanne Kimber
I would say there has been a shift towards employee ownership and incentivisation, more than anything else as a result of the pandemic. Business owners have been reflecting on the impact of the pandemic and the need to keep staff motivated and engaged. EOT has become very popular as a result of it. Then there are the tax benefits that come along with it.
Trade sales and exploring that route is becoming less popular. They are not the first thing on anyone’s mind anymore because it comes back to that staff issue.
When it comes to an EOT, money can’t be the be all and end all, because if that’s your mentality this is not the route for you. You have to have the holistic appreciation of what you’re achieving by selling your business, essentially to your staff. It’s indirect ownership but that still means that everyone still benefits from it.
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