Ownership succession
The most typical route to employee ownership is private owners – an individual entrepreneur or family business for example – deciding to sell the company to their own employees.
A recent report from the DTI's Small Business Service – 'Passing the Baton' – says employee buy-outs are one of the main business succession options for company owners.
- An increasing number of company owners facing a succession decision are choosing to sell the business to their employees. The advantages of this route are:
- Successive Governments have created a range of tax advantaged schemes, notably the Share Incentive Plan, which make structuring an employee buy-out feasible and rewarding for owner and employees alike.
- Selling to the workforce is a way for owners to recognise employees' role in helping build the business.
- Employee buy-outs have an excellent record of sustainability compared with management buy-outs, so the enterprise the owner created is more likely to survive.
- Employee buy-outs are less likely than a trade sale to result in closure of premises in local economies who may have come to rely on them for jobs and trade.
- Allowing existing management and staff to buy the company puts control in the hands of people who know it best, and who will be most committed to making it succeed.
- An employee buy-out means continuity for customers and suppliers.