Bid Writing for Purpose Led Businesses – key takeaways

Cornwall is home to a growing number of employee-owned businesses. What does this mean, and how does it benefit business owners and employee teams?

The Growth Hub delivered a webinar bringing together three experts who have direct experience of businesses transitioning to an Employee Ownership Trust.

Hosted by leadership and culture specialist Ally Glover, you’ll hear from Christian Wilson and Daniel Riches.

Christian is a lawyer with Spencer West who has supported 80 businesses through the process of becoming an Employee Ownership Trust. 

Daniel is a director at The Peloton, the first Employee-Owned Chartered Accountants, who shares his experience of becoming EO.

Check out some of the key takeaways below or watch the webinar in full.

Why EO?

Founders can choose EO for a number of reasons:

Alternative succession route: This structure can serve as an alternative to a trade sale of a business when the owner is looking to exit.

When selling to a third party doesn’t fit: particularly when the owner would like to put the business in the hands of their team and not a third party or larger business.

Maintaining and growing culture: Supporting the team to carry on what the owner started in the business and evolve it in their own direction.

Sharing responsibilities: Bringing the team into the future development of the business. Developing a culture of transparency, resilience and future-proofing.

Understanding the process

Overall structure: Transfer of shares from the current shareholders to an employee ownership trust – a separate entity where the shares are held for and on behalf of the beneficiaries (the employees).

Two options: 

100% EOT – no other shareholders other than the Employee Ownership Trust, former shareholders have fully exited. Using a Trust Limited Company to remove personal liability for individual trustees.

Hybrid Structure – Other shareholders sit alongside the EOT, for example former shareholders or future leaders of the business. The EOT remains a majority shareholder.

Considerations

Planning is key: Early engagement with your team can often support a smooth transition to EOT. Be prepared for lots of questions! Plan how you will communicate with your team throughout the journey.

Post-transition: Who will form the leadership for the business if the founder or owner is exiting? How can those responsibilities of running a business be shared across the team? How will the team make decisions to steer the future of the organisation?

Building future leaders: As a business owner, who could you look to within the team to step up to lead the business if you would like to step away? How can you develop future leaders ahead of your planned transition to EOT?

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