Whenever a business is changing hands whether this is due to crisis, owner succession or divestment, employee ownership is an option which deserves serious consideration. In succession situations, employee ownership through a worker co-operative model can provide a solution for the owner (preferable to a trade sale) and can ensure that a committed workforce takes over. Giving an ownership stake to employees can make the business more profitable and competitive.
How we can help:
- Initial feasibility studies
- Business planning
- Working with employees/steering group
- Legal and technical advice
- Ownership and governance options
- Negotiating with the owner
CMS assisted Unicorn Grocery with the creation of a separate workers co-operative Moss Brook Growers The co-operative farms an area which Unicorn purchased in order to safeguard its supply chain. The work included developing an appropriate legal structure together with financial forecasts and sourcing working capital.
We provided support to the employees of Preston Bus (throughout 2010) in their (unsuccessful) attempt to purchase the business from Stagecoach. This included negotiations with Stagecoach/The Competition Commission/Preston City Council, support to the employee board, presentations to staff meetings (150 people) developing an offer/valuation, business and financial planning. The work was undertake with Baxi Partnership, KPMG and Napthens solicitors.
UBH International Limited went into receivership in February 1998 putting 300 people out of work. CMS staff were called in by the trade unions and worked with corporate financiers (Casson Beckman) and Malcolm Lynch Solicitors (now Wrigleys) to effect an employee buyout. 90 former employees were willing to invest £5,000 each and this levered in over £2m. The business continues to trade and in 2010 features in the top 100 co-operatives/employee owned business (£12.5m)
Savant Enterprises resulted from the employee buyout of a well-established company based in the Lancashire town of Carnforth. It specialised in the design of life critical systems (blood product control software). When the owners decided to retire they considered a trade sale and the managers/employees realised that they may have to move to a new location. With the help of CMS staff and Wrigley’s solicitors, the managers/employees were assisted to purchase the business using a performance related arrangement in which the owners received a proportion of the net proceeds of invoices to existing customers for a period of 3 years following the owner’s retirement.
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