Updated: Apr 18
Transferring your business to employee ownership is an ethical choice and a great way to get employees to engage with the company and its vision, but it can also be an opportunity to secure the unique legacy that you’ve strived to create.
When you’re ready to move on from your business, whether you’re retiring or moving onto new ventures, you may want reassurance that what you’ve built over the years will remain intact. In this case, selling to an external buyer may not be the best option.
Selling to a competitor or investor puts your company’s unique identity at risk. Post-acquisition, companies are often absorbed into a larger groups or buy and build situations, where your carefully built company ethos is exchanged for enhanced profitability. Your employees, on the other hand, have chosen to remain loyal to your company’s unique culture and values. Given the chance, they’ll ensure that what you’ve built will endure for years to come.
When the ownership of your business transfers to your employees, it transitions from an autocracy to a democracy. Employee representatives are elected to the board of trustees and board of directors preserving some legacy company values and values important to employees moving forward. In the long term, employee engagement and productivity increase as employees become participators rather than just spectators.
Selling to your employees creates a win-win situation. Employees are eligible for tax free bonuses up to £3600 per annum. Owners qualify for full CGT relief, any excess cash forms part of the consideration and is distributed tax free on day one. Employee ownership gives you the opportunity to continue serving as a trustee, director, or employee or to step away entirely.
The speed of transition can be tailored to your situation, and your expertise, experience, and mentoring could prove invaluable in helping the new owners find their bearings. This not only means that there is a sensible handover period, but it also gives you time to ensure that your legacy is secured in the business moving forwards. You still get all the benefits of having sold your business and more, including getting your time back, but you also get to ensure your business is heading in the right direction before saying goodbye completely.
Call us on 01384 274 778 / 075 888 925 88 to discuss or go ahead and book a free consultation to discuss your options.