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The Benefits of Employee Ownership

It was Employee Ownership (EO) Day 2022 on 24th June and Douglas Roberts, Partner in the Corporate team of CeeD member Lindsays, has said that he expects to complete more EO deals than ever before this year as businesses realise benefits of the model where staff become owners of firms.

Douglas has been involved in almost twice as many employee ownership deals across the country so far this year than they were in the whole of 2021. He sees no signs of that trend slowing with the Scottish Government pushing for 500 Employee-Owned Businesses (EOBs) to be based in the country by 2030.

And he believes the rise will add another layer of resilience to the nation’s economy as businesses face up to challenges including rising costs. Nine Employee Ownership Trust (EOT) deals have already been completed by Lindsays this year, many of them breaking ground in new sectors.

During 2021 they assisted five businesses with the transition following on from 15 others in the previous four years.

Douglas said:

“We are seeing huge demand from companies interested in, then becoming, employee-owned. As well as the transitions we have completed so far this year, a number of other deals are in the pipeline. It’s really encouraging for the Scottish economy.

“Increasing numbers of businesses are realising that employee ownership can work for them. It’s clear from the companies we are involved with that this is a model that can work for any size of company.

“This is a model which brings benefits for everyone.

“For staff who become employee owners, they secure a controlling stake in their future. For those looking to sell their business, it allows them to secure the future of their company while also managing their departure in a way that works for them.”

Recent figures from Co-operative Development Scotland (CDS) revealed there are currently 195 EOBs operating in Scotland - 146 of them Scottish registered and 49 non-Scottish registered. Deals in which Lindsays have been involved with so far this year include that which saw Edinburgh-based Kidzcare become what’s thought to be the first business in the Scottish childcare sector to transition to employee ownership.

Others include those which have seen Inverness-headquartered chain Carlton Bingo and Glasgow-founded music industry giant guitarguitar become owned by EOTs.

Organised by the Employee Ownership Association, EO Day highlights the economic and social benefits that can be achieved when employees have a stake and a say in where they work. The theme this year is #GrowEO.

Research after the 2008 credit crunch found that employee-owned companies outperformed non-EO companies - a factor which could prove important in the current financial climate.

Douglas added:

“The knowledge that staff in EO businesses have that their destiny is in their own hands can be a powerful factor in motivating them to ensure their business is successful and sustainable. They benefit directly from that success.

“As a result, they often stick together and work harder for each other. This encourages innovation, as well as improving performance and productivity. As the number of employee-owned companies grows, that will add an increasingly important layer of resilience to the Scottish economy.”

Read more, including the key facts of employee ownership, here.