Traditionally, when the owners of a business were starting to think about retirement or stepping back, they looked for a buyer – either a competitor, an investor or sometimes the current management. But if you want to secure the future of your business, protect its character, and make a different sort of choice, there is another option.
Fitzgerald Contractors is a civil engineering firm, started in 1948. As the majority shareholder in the business, Nick Coley, began to think about stepping back from the firm, they reviewed their options and looked seriously at employee ownership.
There are various different models for a business owned by its workers, including worker co-operatives, direct share ownership by employees, or the trust model. In the context of a sizeable existing business like Fitzgerald, using an employee ownership trust (EOT) makes a lot of sense.
Setting up an EOT means transferring at least 51% of the company's shares into a trust. The shares are legally owned by a trustee (or trustees) who hold those shares on behalf of all the employees, all of whom can get a profit share of up to £3600 each year, tax-free going forward. There are tax advantages for the selling owners too, with no capital gains tax payable on the sale price for the shares.
There are some things to think carefully about, like the valuation of the business, and how the views of employees will be heard in the new structure; but if you get those things right, all the research shows that it can be a real step forward for the business.
Fitzgerald completed the transition this week. Nick said, “we think that employee ownership is ideally suited to Fitzgerald’s philosophy, and the thinking behind employee ownership has businesses exactly like ours in mind. When we were ready to go down this road, David and the team from Anthony Collins Solicitors made the process absolutely clear, explained the legal documents we needed, and worked really hard to make it happen in our timescale. We're delighted to have made the change, and we're very excited about the future for Fitzgerald.”
Fitzgerald has made that shift; the company has placed the future of the business in the hands of its staff, who all now share in its success. We're very pleased for Nick and his colleagues and wish them all the best on their journey.
What about your business? Is this a road you might want to go down? If it is – please get in touch.
We consider that an Employee Ownership Trust model is ideally suited to Fitzgerald’s philosophy and the thinking behind employee ownership has businesses exactly like ours in mind. This is a very exciting stage in the company’s history and safeguards Fitzgerald’s future for the benefit of all employees.