Looking ahead to 2018: A growing appetite for employee ownership

Sarah Deas, chief executive of Co-operative Development Scotland, says the sector is set for a period of expansion

We believe the appetite for employee ownership has never been greater before.

In the last five years the number of employee-owned businesses operating in Scotland has trebled and in particular this year we have been working on a “deal a month” on average. Our client pipeline is expanding too, indicating take-up of the model will continue to accelerate in future years.

Furthermore, there are over 16,000 Scottish businesses expected to transfer ownership in the next few years, so the opportunity for employee ownership is significant.

One of the main challenges we face is a limited awareness of the model, however we’re making good progress and in 2018 we’re looking forward to building on the momentum we’ve created.

Sarah Deas
Sarah Deas from CDS

Our aspiration is to achieve a tenfold increase in employee ownership in Scotland over a ten-year period. As the baby boomer generation reaches retirement age, many business owners will be considering what will happen to their business when they choose to take that step back.  Starting that process early opens up more options for businesses and we’ve been working hard to reach owners at the relevant stage.

Promoting employee ownership will help drive growth in Scotland’s economy and create greater wealth equality in society.  This helps deliver the Scottish government’s vision to achieve inclusive growth that ‘combines increased prosperity with greater equity; that creates opportunities for all and distributes the dividends of prosperity fairly’.

There is growing recognition of this potential contribution, to both the inclusive growth agenda and also to international competitiveness. As a result, the 2017 Programme for Government included a commitment to investigate the scope to expand support for the model. This commitment was reinforced by a debate in the Scottish Parliament in September at which all parties supported the motion calling for business owners to consider employee ownership in their succession planning and for further support to be given to enable take-up of the model (transcript here). We were delighted to receive this cross party recognition and will be working to maximise this support in 2018.

Ownership succession is now a prominent issue in the UK and internationally as ‘baby-boomers’ increasingly wish to exit the businesses they’ve created.  The issue is compounded by the recession having slowed the market for business sales, causing a backlog of ownership transfers sometimes referred to as the “succession time bomb”.

For these reasons, we believe that the relevance of employee ownership has never been greater.

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