Scotland's economy: surge in employee-owned companies

The number of employee-owned businesses in Scotland has trebled over the past five years and a deal per month is forecast over the coming 12 months, research today indicates.

From left: Caledonia Social Care regional manager Stuart Robertson, managing director Margaret Paterson and regional manager Derek Oliver. Picture: Nick Ponty

Estimates put the number of businesses north of the Border looking to transfer ownership over the next five years at 16,000, and experts say the appetite for employee ownership as a succession model has surged.

Co-operative Development Scotland (CDS), part of Scottish Enterprise, said that over a ten-year period it was looking to achieve a tenfold increase in employee ownership in Scotland.

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Recent research showed that there were 86 employee-owned companies north of the Border, with some 6,800 “employee-owners” generating a combined turnover of about £925 million.

The goal to ramp up employee ownership emerged as details were revealed today of the latest business to adopt the model in Scotland. It also coincided with the fifth annual UK-wide Employee Ownership Day.

Sarah Deas, director of CDS, said: “We probably shouldn’t be too surprised at the number of businesses expected to transfer ownership in the next five years as this is the baby boom generation coming through.

“In the last five years the number of employee owned businesses operating in Scotland has trebled and we are forecasting a deal a month on average over the next year.

“When considering their exit strategy, the motivations for a business owner to go down the employee-ownership route tends to focus on a number of key areas, such as rewarding and empowering loyal employees and rooting the business in the local community.”

CDS has launched an expert succession support service in the last year and the organisation said it is “trying to get business leaders to think a bit earlier about the succession issue”.

Deas added: “Over the coming year we see many sectors that are relatively new to employee ownership coming through, such as construction, energy, aerospace, defence and marine. The model is really taking off.”

Scotland’s latest business to embrace employee ownership is newly established social care provider Caledonia Social Care.

With a projected annual turnover of £2.5m, Caledonia will focus on the provision of care at home support, including the provision of dementia specific services, alongside personal care to older, disabled and vulnerable people.

Alzheimer Scotland will initially be the main investor but plans to hand it over fully to the newly formed enterprise in the future.

Margaret Paterson, managing director of Caledonia Social Care, said: “Employee ownership is particularly suited to the social care sector as it is consistently shown to improve staff engagement and wellbeing.”