Employees are expected to become the owners of 30 more Scottish companies this year – double the number of deals completed in 2020.
The forecast has been made as Employee Ownership Day highlights the growing contribution of staff-owned businesses to the economy. There are currently 103 firms defined as employee-owned companies north of the Border – with the Scottish Government targeting 500 by the end of this decade.
Lawyer Douglas Roberts, a director in the corporate team at legal firm Lindsays, is working with a number of businesses embarking on the change, having advised more than 15 employee ownership (EO) companies over the past four years.
He said: “The Scottish Government target is ambitious, but the increasing number of EO companies will have a huge benefit to the economy because it will keep jobs, wealth and talent in this country.
“Commonly when Scottish companies are sold then the main administrative roles – often the highest paid positions in the company – are moved out of Scotland and eventually the Scottish operations may be shut. Employee-owned companies are far more likely to remain.”
Carole Leslie, founder of Ownership Associates, who has worked with Roberts on a series of deals, said: “EO has the ability to bring real prosperity to businesses, and not just through staff satisfaction, but increased productivity and revenue. We’re forecasting a further 30 Scottish companies will move to employee ownership this year, and that’s great news for the Scottish economy.”
There were 15 firms that made the switch to employee ownership in 2020, with Co-operative Development Scotland – the Scottish Enterprise division supporting the push – having already said it expects 2021 to be the most successful year yet for transitions.
Roberts added: “We tend to find an EO company’s staff are more motivated and provide better service because they are more engaged and benefit from the profits of the company.
“Research after the 2008 credit crunch showed that employee-owned companies outperformed non-EO companies.
“As a result of the staff having ownership of the business they stick together and work harder knowing that they will all benefit rather than just a few shareholders. There is less of the ‘them and us’ attitude.
“It is hoped that EO companies will also come out stronger from the Covid pandemic.”
Montrose-based Gill Financial is among the firms which has become employee-owned in the past 12 months. Its ten employees became owners through an employee ownership trust (EOT) with Lindsays and Ownership Associates advising on the change.
Roy Gill and his wife Lesley decided to make the move to provide a new level of certainty for staff and customers while allowing Roy, who has worked in financial services since 1991, to make plans for his own future.
He said: “It was about the brilliant team here and our clients, first and foremost. An acquisition would have put so much at risk – and I hated the thought of that.”