It all began with the dilemma of succession…

The Baxendale story – the one we tell people when they first meet us – is one about Employee Ownership succession. Not only is it the reason Baxendale exists in its current form but it’s the backbone that fortifies our ambitious team to serve our clients as best we can: with the drive, empathy and innovation that being employee owned inspires in us.

Though there are many reasons for businesses to become employee owned, it’s often arrived at due to owners nearing retirement age and seeking solutions to exit the company without obliterating the fruit of their hard work: the businesses they’re leaving.

“Succession is a sensitive subject, that is often put off,” explains our Legal Manager, Nadeem Azhar. “Owners are wedded to their work, but they tend not to have a succession plan that suits both their needs and those of the business. Often, they won’t know selling to their employees is an option. In many cases it’s likely to be the best option. We need to increase awareness about this.”

Selling your company directly to competitors, speculators and investors will often result in it becoming unrecognisable, and at worst, can mean an entire change of personnel and identity, not to mention how your loyal customers or service users can be forgotten.

Employee Ownership: The lightbulb moment

It’s absolutely right that after a lifetime of working hard, business owners should be able to enjoy the financial stability that selling on affords them. However, many exiting founders find it difficult to balance the benefits of an external sale with a desire to attract the right buyer who will keep their vision going.

In addition to the challenges above, founders may need to tweak their short-term business strategy for demonstrable growth, ramp up brand visibility, change tax strategies and train newcomers, which can make transition lengthier and more disruptive than selling to those already placed to do a good job: your skilled and experienced workforce. 

Selling to your employees still means getting the market price for your business, and most of our clients find it a revelation: it’s the answer they’ve been looking for. 

10 Key Benefits of Employee Ownership

• Your business, as you know it, continues with minimal disruption, especially if you’re supported by specialist advisors who can help with governance, structures and shares.
• You don’t need to find a buyer and convince outsiders of the value of the business; your employees will already be aware of its potential and will pay a fair price. A misconception is that selling to employees means selling at a discount.
• There are tax breaks – introduced in the Finance Act of 2014 – when you sell to an Employee Ownership Trust (EOT), because the government recognises the value of EO businesses to the economy. These tax gains impact on both seller – exemption from capital gains tax – and individual employees, who can receive up to a £3,600 tax-free bonus every year.
• You’re better positioned to negotiate exit terms and can design a model that suits you and the business best.
• The business becomes innovative and pioneering: more great businesses are looking to employee ownership because the model fosters agility, adaptability and invention. This mind-set is ultimately better at future-proofing against upcoming challenges.
• Loss of jobs in the community can be avoided; contractors and supplier relationships can continue, and plans will be executed only if the employees that know the business best think it’s the right thing to do.
• You are rewarding your employees, demonstrating gratitude for their loyal and oftentimes long service.
• The unique culture you’ve created won’t be diluted by those that don’t ‘get’ it.
• You’ll have more flexibility to proceed at the right pace, plus negotiate any input you might have in the business going forward.
• A workforce of owners is an engaged workforce, often resulting in increased productivity and growth. EO businesses commonly go from strength to strength, meaning that the best health your business has ever been in may be in its future.

We believe in Employee Ownership so much that we’ve helped more than 100 businesses to become employee owned.

 

We helped Novograf become Employee Owned. Read about them in The Guardian

Our company began life in 1866 as a family-owned foundry, manufacturing railway carriages and gas lit lampposts, and later, boilers. After extensive research into alternatives to the family owned model, Philip Baxendale, whose great grandfather started the business, guided the company that became ‘Baxendale’ into being employee owned in 1983.

Since 2000, with our manufacturing activities behind us, we’ve offered consultancy services that support mutual and employee ownership structures and cultures, enabling more businesses to reap the benefits of this under-publicised alternative. Our clients tell us time and again how glad they are to have come upon the model, just like we’re glad that Philip did all those years ago.

That we still tell our EO story is testament to how potent employee ownership is to the owners: us. If you choose Employee Ownership as your succession solution, your legacy will continue, which is why we still talk about Philip Baxendale.

Want to know more about Employee Ownership?

We offer end-to-end support, and can guide you through the process. Email ewan.hall@baxendale.co.uk to start the conversation.