Employee-owned businesses are relatively uncommon in the UK, but with several household names now embracing the concept, could there be reinforcements to the upward trend we have been seeing these last few years?
There are many reasons why a business might consider employee ownership, such as creating too much competition for a buyer or avoiding a foreign acquisition, but the primary drivers for some of the most notable adopters of this model are much more people-centric.
When Richer Sounds' founder Julian Richer took the decision to sell his business to his employees in May this year, he stated that it was about doing the right thing. It was an action that not only cemented the succession of his business, but also rewarded the people who had contributed to its success.
One of the unique benefits of the employee ownership model is that it gives staff a stake in the success of their own organisation, providing a more inclusive model that allows all employees to have a say and be part of business growth. The approach has also been shown to enhance an organisation's ability to recruit and retain talent.
Like any new business model, employee ownership requires significant time and planning on the part of management to make it work; however, a sale into employee ownership can be a good fit for many, and offers an interesting alternative to more traditional business exits.
The potential benefits of the employee ownership model are significant, and business owners wishing to preserve their legacy, provide job security for their staff or retain independence should strongly consider the option if looking to sell.
TLT has been active in employee ownership for a number of years, and has observed the increasing trend in the employee ownership model. Given the number of high-profile transitions in the last 18 months, with Sawday's, Riverford Organics and Aardman Animations all making the decision to convert, we expect the upward trend will continue.
Ben Watson is partner at UK law firm TLT
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