Employee ownership

What is Employee Ownership?

Employee ownership describes a scenario where the employees have a "significant and meaningful stake" in the ownership of the business. This is commonly where the employees collectively hold more than 50% of the share capital / voting rights in the business.

There is no single model of employee ownership – the structure can be tailored to fit a wide range of situations. Often it includes the use of an Employee Ownership Trust which purchases the business or shares in the business from the owner and holds these on behalf of the employees.

Employee ownership is increasingly been seen as a way for owners to put in place a viable succession plan, allowing them to exit at a fair price while ensuring the future of the business they have built. The model has many other benefits, and can offer tax advantages to the selling owner.

How can Harper Macleod LLP help with Employee Ownership?

We work alongside organisations such as Scottish Enterprise and Co-operative Development Scotland to help facilitate and support the transition of businesses into employee ownership.

We have advised business owners / businesses on employee buy-outs as the chosen solution when considering succession planning options, including full indirect ownership by an employee ownership trust and a hybrid option of direct / indirect ownership, with shares held by a mix of employee ownership trusts and individual employees.

Businesses in more remote areas of Scotland can face greater challenges with their succession planning and are perhaps more likely to look at transition to employee ownership as a suitable solution. The locations of our offices throughout Scotland, and particularly in Inverness, Lerwick and Thurso, allow us to provide detailed advice on employee ownership locally.

In addition, our Banking & Finance team are experienced in advising lenders who provide finance to assist the transition of businesses into employee ownership, such as alternative finance provider ThinCats in its financing of the full employee buy-out of Scottish IT firm Network ROI Limited.

Examples of our experience

  • We acted for Clansman Dynamics Limited in relation to its hybrid model transition into employee ownership
  • We acted for a Highlands-based healthcare business in relation to matters arising from its transition into employee ownership
  • We acted for an Aberdeenshire-based manufacturing and engineering business in relation to matters arising from its transition into employee ownership
  • We are currently acting for a textile manufacturer in relation to its transfer into full indirect ownership via an employee ownership trust.

We act as advisers to a number of employee-owned businesses in Scotland, supporting their ambitions to maintain ownership of such businesses locally and to safeguard sustainable, profitable and productive businesses with motivated staff, all for the benefit of the Scottish economy as a whole. We've also acted for lenders who are supporting the transition of businesses in Scotland into employee ownership.

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