UK distributor for computer retailers Target Components has planned to become an employee-owned business to protect its staff from potential acquisition approaches.
The West Yorkshire-based firm will adopt an employee ownership trust (EOT) model, in which 70 members of staff are the majority owners of the business. Target’s existing shareholders, managing director Paul Cubbage and owner Ian Prescott, will each hold a 10% minority shareholder in the new ownership structure.
As part of the change, Cubbage will resign from the business’ day-to-day operations, move to a non-executive director role and start searching for new managing directors to lead the organisation. Target Components will use the EOT to protect employees from the potential impact of an acquisition approach and would see stakeholders benefit and earn more.
Cubbage explained that the team has determined that an EOT is best suited for the future of the relationship between staff and employees, and all staff will get a portion of the EOT transaction. Another advantage is that the annual profit sharing, which is 10% of the business' pre-tax profit, will be tax exempt in the future under EOT rules.
“The EOT allows us to abandon our conscience, it was a big part of our thinking. Basically, it’s [for] the employment security of our people who helped us come here, the culture and spirit of our business, and the potential impact of acquiring our relationships with our customers and partners,” he said.
Cubbage added that the EOT was also chosen to protect the culture of the business and what it means for employees and customers.
