Making employee ownership the first choice

Just days ahead of the first ever Employee Ownership Day on July 4, the Employee Ownership: Solutions for the Private Sector conference looked at promoting the model in today’s challenging economic climate.

At the conference, a fringe event of Co-operative Congress, Rhian Edwards, project manager for Wales Co-operative Centre’s business succession team, told delegates how 29 per cent of Welsh businesses have been owned by the same person for over 21 years. “That means 15,000 business owners could be looking to leave their business,” she said.

Transfer failure, she added, was a major concern. “Across Europe, an estimated 150,000 companies with 600,000 jobs may be lost each year,” she said. “One third of all business closures are succession failures.”

Delegates heard from two Welsh businesses that successfully transferred to employee ownership. Barry Wise, former managing director of Aber Instruments, said it took 12 years to transfer their business. “There’s often a lot of baggage and that has to be sorted out,” he said. “It has to be quite a long and careful planning process. Part of the diagnostic initially is to understand exactly what’s being sold. Is there a willing buyer and a willing seller and what are they actually selling?”

Steve Meredith, managing director of Primepac Solutions, told delegates how in its second year Primepac was saved by £30,000 each from Co-operative and Community Finance and a business angel. “The business angel put £30,000 into a tax beneficial black hole and was bought out last year for £180,000,” he said.

“We can grow people from the shop floor and that’s what we’re doing.” The company, which was set up by 19 former Budelpack workers in 2005, is now owned by 22 permanent staff and employs another 20 temporary staff. It turned over more than £4m last year.

Delegates discussed the best way to promote employee ownership, to established companies and start ups. Mr Wise said: “If we had every accountant and every solicitor clued up about this as a viable model that would be quite interesting.”

Les Lawrie, Secretary of the Co-operative Party south east region, said education was the key: “Schools talk about sole ownership, partnerships and limited companies but employee ownership is blanked out," he said. "Chambers of Commerce educate new business start ups.”

Bob Cannell of Suma Wholefoods, a workers’ co-operative, added: “Transferring to employee ownership can be done in a structured way and you don’t have to hope leaders will emerge. We tend to forget about people under the pressure of time. There are three dimensions; legal, financial and people. Please don’t forget the people.”