On 28th June 2019, Torchbox celebrated Employee Ownership Day by becoming the first digital agency in the UK to transfer 100% of the ownership of its business to its employees.
In an economic climate where dynamic, independently owned digital agencies are being taken over by large advertising companies or tech businesses, Torchbox founders Tom Dyson and Olly Willans decided that a trade sale was not for them. Instead they were looking for an innovative succession solution that would allow the business to remain independent and to maintain Torchbox’s ethical focus. They found employee ownership.
“When we were considering the future of Torchbox, we thought about the importance of retaining our independent spirit and continuing our fast growth,” explained Olly. “We decided that by far the best people to own Torchbox are the people who have made it the success it is today, and the people who will continue to make it a success tomorrow.”
Tom and Olly founded Torchbox in May 2000. By their own admission they knew nothing about running a business, but they knew how to make websites at a time when everyone wanted a website. Within a few months they had a small group of diverse employees, including two astrophysicists, a singer and a gardener, and a growing reputation for creating innovative digital solutions for charitable organisations; including the Multiple Sclerosis Society.
By the late 2000s, Tom and Olly had over 20 staff in their Oxfordshire office and had added many high profile not for profit organisations such as Greenpeace, the International Red Cross and WWF to their growing list of clients. Torchbox now has 65 employees across two offices in Oxfordshire and Bristol. The company offers digital product development and marketing services to clients across the non-profit, healthcare and higher education sectors. It also created Wagtail, the popular open source CMS now used by the NHS, NASA and Google.
When Tom and Olly started thinking about what was next for Torchbox and themselves, they were clear that continuity and growth were at the heart of their vision for the business in the future. Tom and Olly explained their plans for a transition to employee ownership to staff in March 2019.
Under the new employee owned structure, 100% of the shares in Torchbox transfer to an Employee Ownership Trust (EOT) for the benefit of Torchbox’s employees and the purchase price for the shares will be repaid from the profits of the business over the next five years. The EOT will work alongside Torchbox’s board of directors to oversee strategy and growth of the business, with an emphasis on ensuring that the business’s sense of purpose and values would continue after Tom and Olly moved on.
As well as securing ownership succession for Torchbox, the EOT is also a tax efficient structure. Tom and Olly will receive the cash from the sale of their shares free from capital gains tax and the new employee owners can receive an income tax free bonus of up to £3,600 each year.
Four employee trustee directors were elected to the EOT by Torchbox employees after submitting 100 words on why they would make a good trustee. Tom and Olly are also trustee directors and will continue to work in the business until the purchase price has been repaid; helping Torchbox to maintain its growth and success, including continuing with its US expansion plans.
In Tom’s words, “Olly and I started Torchbox, but its successes have all been down to the wonderful, creative, thoughtful people who work here. We’re very happy that they are the new owners.”
“Baxendale’s knowledge and experience has helped us throughout our EO journey. Ewan and his team provided us with clear advice and guidance and were approachable and responsive at every stage of the process. We would highly recommend them”.
Huge congratulations to Tom, Olly and everyone at Torchbox on your transition to employee ownership. It was a great pleasure helping you get there. Torchbox was the 10th company to complete an EO transition with the help of the Baxendale Ownership team in 2019.