It’s not just the staff. You have to look at every party involved, every stakeholder. It’s about explaining and educating staff about what you have done and why it is so significant but then still being available and supportive, as you make a progressive exit.
It makes for a much friendlier transition, to be perfectly honest. Sometimes you can do exits or partial exits and equity and wrap-up investments, and you feel like you’ve had your arm cut off.
Mathew Haslam: It is a real journey and you go through some major emotions. You’re letting go, in a good way, of your entrepreneurship, and that’s everything that a business person lives for.
I was 60 in May and I said 30 years ago, when I started Hardscape, that I wasn’t going to do this beyond 60, but I’d forgotten about that. It was only, say, six months before we became an employee-owned business that I realised, ‘Wow, I said that.’
The biggest reason for me was risk. I had 96 per cent of the business. It’s too much risk, not in terms of my money but in terms of losing a team I’d spent 30 years putting together. Employee- owned was exactly the right way to go.
The ethos of
rewarding your employees is key, especially in this climate where it is really difficult to retain staff
It was no coincidence that we did an EOT. It was part of our culture. Values were a massive part of our business and employee-ownership is the way to nail that.
In the last four weeks we have done our first employee contribution. It’s not a dividend, it’s a contribution. It’s tax-free. A lot of people in the lower end of the business just cannot believe it.
As I explained to them at the beginning of this journey, ‘You’ll own some of the business. You don’t have to pay for it. If it goes bust it doesn’t cost you anything.’ They were asking, ‘What is the catch?’ getting those points across is a problem.
I’ve done this for me and the continuance of the business, but that really matters, it really matters. Our business had been built by the support of not just our staff and all our stakeholders, but customers as well.
Joanne Kimber: I did a management buyout in 2019 and started to think about my exit then. It might seem a bit ridiculous, but you have got to get everything in shape to exit a business. Your financials have to be spot on and you need a really strong leadership team that you feel confident you can hand the reins over to and step back.
Covid definitely accelerated my thought process about exit. I was working from home and that allowed me to think, ‘I have got a great team, I can trust them to do it.’
It is quite an emotional thing. I’ve been with the business 22 years. You’ve nurtured something, you’ve aligned it to your personal values and you want it to continue in that vein.
A trade sale was my starting point and the reason that didn’t work for me was because it didn’t satisfy some of the personal legacy thoughts I had. Also, I’ve not got here on my own, the team deserve to be able to continue the business.
They can’t necessarily afford it, they’re maybe not entrepreneurial in that they don’t want to do a management buyout, so for me an EOT is a really good path to satisfy everybody’s needs.
We employ people in our business that are on minimum wage. We don’t have a business without them and it’s really important for me to level up and make sure that they’re looked after. An EOT allows you to do that really well.
Also, as I was getting older, I felt I was restricting the business a bit, thinking, ‘That’s totally my risk to do that next thing’. That was one of the things that really forced me to do it.
Richard Few: I find the whole contemplation of exit really difficult. If you’ve got a big enough vision, it’s hard to look into the whole subject.
We get asked a lot about it when we’re acquiring franchisees. They’re curious about what the long-term plans are for us as owners but it’s always been a difficult thing. I think partly because there’s always this feeling of either all in or all out. The thought of being without my business for longer than I was in it scares me.
EOT has got to the top of our list. However, I would suggest if you stuck 100 founder owners in a room it would probably be the option that is least thought about.
We have a purpose and a mission that will certainly live beyond me and my capabilities, that’s for sure. We’ve already got to that point.
It was no
coincidence that we did an EOT. It was part of our culture.
Values were a massive part of our business and employee- ownership is the way to nail that
We’ve started employing some people into the team that are way more capable than myself. Our ambition is at some point to handover a level of ownership to the team, because it is about legacy and it is about impact.
We have an open dialogue with the team but we wouldn’t sit here any time inside the next six to 12 months and say, ‘We’re definitely doing X in this time frame, and this is what it looks like.’ Things change and things happen.
So, there are lots of variables, but it comes down to what you’re trying to leave behind and what involvement do you want, going forward. Positively impacting people’s lives is a far greater legacy than sticking £150m in the bank and no-one really appreciating you for it.
LANCASHIREBUSINESSVIEW.CO.UK
25
DEBATE
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