Harper Macleod is delighted to have advised in the employee buyout of Inverness-based fresh produce provider Swansons Food Wholesalers, who have taken ownership of the business from founder Magnus Swanson.
More than 40 staff now have a stake in the business, joining a growing number of employee-owned businesses in Scotland.
The Harper Macleod team, led by Partner Chris Kerr and Senior Associate Peter McLuckie, advised on the transition of shares from Magnus Swanson to a new Employee Ownership Trust set up to hold the shares in the company. Harper Macleod, as part of a team of advisers comprising accountants, Saffery Champness and employee ownership advisers Ownership Associates, provided expert corporate law advice on the transfer of shares to the Trust, the establishment of the Trust and the changes to the constitution of the company needed to establish the proper foundations for a company under employee ownership.
Harper Macleod also assisted Saffery Champness with the pre-transaction HMRC clearance applications. With its proven track record in employee buy-outs Harper Macleod was able to advise Magnus Swanson regarding the structure of the transaction best suited to his desired outcome and explore the options open to him to achieve his succession plan.
Established in 1991 by managing director Magnus Swanson, Swansons Food Wholesalers began as a single greengrocer shop with two staff. Thirty years on, it has grown into an extensive wholesale business, with a forty-strong team working from depots in Inverness, Nairn and Elgin. The company supplies fresh, locally-grown produce to independent hotels, restaurants and shops across the Highlands, and also holds contracts for care homes, schools, nurseries and colleges in the area. It has been supplying schools in the Moray Council area for 18 years and in the Highland Council area for ten.
During 2020, Magnus received an offer for the business from a larger wholesaler based in the south. While he determined that the offer wasn’t right for Swansons, it prompted him to begin considering his eventual exit from the business.
On exploring his options, Magnus said: “When it comes to considering your exit, one of the most obvious options is a trade sale. However, I was concerned that selling to a remote buyer might see one of the branches closed, staff laid off, or clients resigned. We have a loyal and long-serving team at Swansons, and I wanted to ensure their jobs were secure. It was at this point that I began to consider employee ownership. I had seen some articles in the media and also knew that a couple of our clients were employee-owned. I thought that employee ownership could be a good fit with our goals and values and would allow me to gradually step back from the business over a number of years.”
Chris Kerr, Corporate Partner with Harper Macleod, is recognised by The Legal 500 as being "particularly knowledgable about the Scottish employee ownership market. Like Swansons, Harper Macleod has offices in Inverness and Elgin, and Chris Kerr said: "A sale to an Employee Ownership Trust can be a very good option for owners who are looking to set an exit strategy that is driven by their strong ties to the local area and where retaining ownership in the community is an important factor. This tends to be particularly common with business owners in the Highlands and Islands.
"Swansons is an excellent example of an established local company and important employer in the area, where sustainability and employee interests were crucial to the sellers’ succession planning. The Employee Ownership route isn’t for everyone but it is an option that should always be explored where possible. What is important is that business owners and employees looking to take ownership are making an informed choice and we are always happy to advise them on the available options, supporting them in making the right decision for the future of the business."
Statistics demonstrate that employee-owned businesses consistently outperform their non EO counterparts in terms of higher levels of profitability, increased productivity brought about by higher levels of engagement and enhanced employee wellbeing, as well as improved business resilience during times of economic crisis. Within Scotland, there are now around 120 employee-owned companies operating, with approximately 7,500 employee-owners generating a combined turnover of around £950 million.
Head of Co-operative Development Scotland, Clare Alexander, said: “Swansons Food Wholesalers is a great example of a business with community at its heart; championing locally-grown produce, supporting and servicing other businesses in the area, and providing opportunities for local people. Employee ownership allows Magnus to step back from the business when the time comes, while helping ensure that this ethos is maintained in the future.
“Not only does employee ownership impact positively on the individual businesses and staff, it is good for the wider economy, helping to secure jobs and keep businesses rooted in Scotland. The model is key to helping the Scottish Government with its aim of creating a stronger and fairer economy that ensures local people and businesses have a genuine stake in producing, owning and enjoying the wealth they create.”