HM Insights

Employee ownership in Scotland – is EO the future of your business?

The Scottish Government has announced a new industry leadership group with the aim of making Scotland the best country in the world for employee owned (EO) businesses.

The bottom line of the new body – Scotland for EO – is to increase the number of employee and worker-owned businesses from around 100 to 500 by 2030 and there is funding available to help that goal.

The move has promoted the EO business model to the top of the news agenda, but why is it something that the country is so keen to get behind?

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Tried and tested

There are currently believed to be around 100 employee and worker owned businesses operating in Scotland with approximately 7,000 employee-owners generating a combined turnover of around £940 million.

As the First Minister, Nicola Sturgeon, was quoted as saying: “All the evidence tells us that employee ownership delivers benefits to business performance, the people who work in them and the places in which they are located. The health of the Scottish economy depends on having a diverse range of business-types and employee ownership clearly has an important role to play in that.

“We want to make it easier for companies and workers to find out more about this model and to move towards it if it’s right for them. Scotland for EO will help to make this into a real option for businesses across Scotland.”

It may not have hit the headlines before, but in fact the EO model has proven itself over the last decade. As professional advisers who have been involved in advising a number of clients on EO during the time, we know the benefits it can bring to all parties – and their customers.

For a start, a study last year show that more than half of people trust employee-owned (EO) businesses more than non-EO businesses. A similar number believe it would be better for the economy if more business were owned by their employees.

EO businesses are more likely to remain in the local area and create long-term jobs, while having an interest in the business your work for is said to create more job satisfaction, greater productivity and fewer absences.

With owners able to realise a value on exit, have control of that exit and protect their ‘legacy’ at the same time, we have seen the number of businesses transitioning from "traditional" ownership to employee ownership grow in recent years.

Succession planning is always high on the agenda of any business, particularly owner-managed or family businesses. If you are going to exit the business, or simply retire, where is the money going to come from to let you extract the value you have in it?

Growing support for Employee Ownership 

With government backing there can be funding available to investigate the feasibility of EO, while there are also tax incentives to becoming employee owned.

Professional advisers, including lawyers, are also now much more aware of the potential for employee ownership as a solution to succession planning for a business and its owners. This has helped make it much more acceptable for the model to be brought up when having these types of discussions.

Scottish Enterprise is running a series of workshops explaining employee ownership for anyone who is interested in finding out more. Aimed at business owners considering an exit, the workshops will demonstrate how employee ownership can offer a tax efficient exit route that protects your company’s legacy while providing a competitive price for the business.

The events take place in:

  • Edinburgh, 27 September 2018
  • Dundee, 23 October 2018
  • Glasgow, 20 February 2019

Click here to find out more about these, and to book your place

Get in touch

Our team has extensive experience of advising businesses on the transition to employee ownership, and in our experience it is never too early to look at all succession options, to ensure you have a exit plan which works best for you.

If you think EO is something that might work for your business, please feel free to get in touch and discuss it with a member of our team.