Geldards shine a spotlight on the growing popularity of Employee Ownership Trusts
Geldards has experienced first-hand the huge explosion of growth in the Employee Ownership sector. The 11th annual EO Day, a celebration by thousands of employee owners, EO businesses and supporters across the UK is taking place on 23rd June 2023 and to celebrate Geldards reflect on a busy year to date guiding some very unique businesses on their journey to become employee owned.
Many businesses are now alive to the very real benefits that transitioning into an Employee Ownership Trust (EOT), as an alternative to the sale of a business on the open market, can provide. The Employee Ownership Association attribute this to #TheEOeffect (the theme of EO Day this year) citing that employee owned businesses are more productive, more resilient and often rooted in their local communities which has a long term effect of job security for the region as well as leaning towards tackling Environmental, Social & Governance (ESG) issues.
In the past sixth months alone Geldards has assisted four businesses transitioning to employee-ownership, helping them to retain skilled staff and maintaining continuity for the business throughout the process. In addition the firm is currently working on three further transitions to employee ownership, having also advised on the sale of two employee owned companies to private equity backed buyers.
The reasons for choosing an EOT are varied, sometimes business owners approaching retirement want to retain the legacy and heritage of a business they have managed over decades and choose an EOT which hands ownership to employees by appointing trustees to ‘look after’ shares in the business on the employees behalf. The model provides consistency and reassurance to the workforce in the event of a sale and not only safeguards jobs, but equally as importantly retains a skilled workforce.
According to the Employee Ownership Association, over 1,300 businesses were recorded as EOTs in the UK by the end of 2022, a huge surge in growth and double the numbers recorded in 2020.
Geldards are one of the leading advisors on Employee Ownership Trusts, and have already completed a number of transactions this year for businesses moving over to an EOT model.
One such company who decided the transition to an Employee Ownership Trust was the right move for them is London-based Opus Magnum (pictured above), makers of bespoke craft furniture for commercial settings. Established over thirty years ago, on entering into an Employee Ownership Trust, Opus Magnum were keen to retain the in-house skills of their talented workforce. Many employees had played a role in establishing the business and boasted unique skills of traditional craftsmanship – a distinctive selling point of their products.
The company’s ethos is built around the use of skilled traditional craftsmanship, blended with modern technology to create bespoke pieces of beautiful furniture for iconic buildings such as the Palace of Westminster, the Bodleian Libraries and the Supreme Court. The pride taken in the production of these cutting edge designs is at the heart of what the company does, so it is easy to see why the transition to an EOT was a good move to retain not only the hard-won legacy of the business, but its highly skilled employees too.
Geldards advised Opus Magnum on the formation of an Employee Ownership Trust (EOT) and the purchase by the EOT of the entire share capital from the two founding shareholders, Chris Turner and John Baulkwill. As well as ensuring the trustees of the EOT understood their role and responsibilities the Geldards team provided support engaging with employees and guiding them through the process.
Chris Turner from Opus Magnum commented:
“Opus Magnum has always been fortunate to have dedicated people and a transition to employee ownership seemed a natural progression. Andrew Evans at Geldards has guided us through the process with great expertise, clarity and experience. The management and whole team at Opus Magnum has been grateful for this input – Thank you. Now it is over to us all to take things forward to the next generation.”
One of the major employers in Tenby, water removal specialists Celtic Vacuum Ltd, took a long time to weigh up their options before choosing to move over to an Employee Ownership Trust. The transition to Employee Ownership Trust was an intimidating prospect at first and the company took their time exploring all options before deciding that an EOT would help maintain the integrity of the business as they approached their anniversary of 30 years of trading.
Geldards advised Celvac on the formation of the EOT and the purchase by the EOT of the entire share capital of Celtic Vacuum Limited from the three founding shareholders, Kim, Joan and Nigel Beynon. Internal communications with staff are key to the success of a smooth transition process, and Geldards worked closely with Celvac advising them on the most appropriate messaging to ensure staff were fully on board.
Claire Gottwaltz, Managing Director, Celvac commented:
“The process of becoming Employee Owned seemed daunting at first. However we appointed Geldards at an early stage and Andrew and his team gave us very practical advice and made the complexities of the transaction a lot easier to understand. The team talked us through each step, demystified the jargon and was instrumental in us getting the deal completed within 9 months of us deciding that an EOT was the best way forward. This year Celvac will be 30 years in business and what better way to celebrate this than by rewarding our hard working and loyal team of employees with this fantastic opportunity”.
The role Geldards plays during a company’s transition to an Employee Ownership Trust does not stop when the contracts are signed and the deal is complete. The team of specialists in Geldards’ Corporate team have a vast amount of experience guiding businesses through the EOT process and take a holistic approach, offering training and support after the transition and ensuring trustees understand their roles and responsibilities, as well as equipping them to understand company accounts.
Geldards offers training sessions for Employee Ownership Trust trustees, providing taster sessions exploring some of the key issues that trustee directors should consider in their role.
To find out more please contact Andrew Evans on +44 29 2039 1761 or andrew.evans@geldards.com.