The rise of the employee ownership model

Employee owned businesses are relatively uncommon in the UK, but with several household names now embracing the concept, could this reinforce the upward trend we've been seeing these last few years? 

There are many reasons why a business might consider employee ownership – too much competition for a buyer or avoiding foreign acquisition for example – yet the primary drivers for some of the most notable adopters of this model are much more people-centric.

We all saw the news that Richer Sounds' founder Julian Richer recently took the decision to sell his business to his employees, describing it as "doing the right thing". This action 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 workers a stake in the success of their own company, providing a more inclusive model that allows all employees to have a say and be part of business growth. The concept has also been shown to enhance a company's ability to recruit and retain talent.

Like any new business model, it 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 very significant, meaning business owners wishing to preserve their legacy, provide job security for their workers 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 to the employee ownership model, we expect the upward trend will continue.

Article originally published by Employee Benefits