National Employee Ownership Day 2022

The 24 June 2022 will be the 10th annual Employee Ownership Day celebrated nationally by many businesses and the Employee Ownership Association. 

What is employee ownership?

It has seen significant traction in the last few years, currently there are well over 750 businesses in the UK who are employee owned and this number is growing.  Businesses who are employee owned include those in the following sectors: 

• Professional Services  
• Manufacturing  
• Construction 
• Retail and wholesale  
• Healthcare 

The benefits of employee-owned businesses over different ownership models can include greater staff retention and longevity, improved staff performance and favourable tax treatments in respect of remuneration employees. 

Employee ownership is not just for large professional services firms or household name retailers.  Increasingly, it is becoming an attractive route to exit for privately owned companies who see this as a viable route for exiting founders (fully or in part) which enables them to do so at a time that suits them without relying on conventional trade sale or management buy-outs. 

One of the main disadvantages of selling to an EOT over a trade sale or MBO route was the need for the business to have sufficient cash surpluses to distribute to the sellers on completion. Often, sellers do want to see some reward in the form of an initial payment being made on completion of a sale.  However, increasingly, institutional lenders are recognising the value of an employee owned and can lend to the trading business to fund in part a disposal through this route therefore overcoming this disadvantage.  

Our corporate and M&A solicitors have experience in transitioning business into employee ownership, including through EOT’s, both with and without third party funding.   To learn more view our employee ownership webinars  and contact our Corporate and M&A Partner Stuart Mullins.