Carole Leslie

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  1. Employee ownership – what’ s in it for the vendor?

    July 12, 2014

    Speaking recently with a business owner currently exploring exit options reminded me of how important, and how difficult, that decision can be. It’s a small business, but a significant employer in its local town. Many of the staff had been with the family business for many years. There had been several approaches to buy but all would mean the business would relocate and local employment would end. “I live in that town. How can I look people in the eyes if I’ve put them out of work?” he said. It’s a common dilemma – succession doesn’t just affect the owner, the decision can be far-reaching.

    For some business owners, it is about getting the best price and that’s fine. Many entrepreneurs put their all into a business, creating jobs and opportunities and sell. They then start something else and the cycle starts again. For many owners, the value of the business isn’t just financial. You want more from a sale than cash in the bank.

    As a business owner, you want to know that the business you created will be cherished, that the relationships you have built over the years maintained, and that the company will grow increasingly stronger to meet the challenges ahead. Who better to do that than the people who know the business best; the employees?

    Selling to employees is becoming an increasingly popular succession option for business owners looking for an exit route. Research proves that employee owned businesses produce more sustainable performance, demonstrate more innovation and have happier employees and customers than traditionally structured businesses.

    Entrepreneurs and leaders in family businesses often find the thought of a trade sale to the competitor unpalatable for a number of reasons: perhaps the business practices don’t meet their high standards, or there is concern that the incoming owner might not treat the customers and employees well. It may be that the the owner wants to keep the business rooted in the local community. Often a trade sale leads to asset stripping and/or relocation. It might just be a desire to retain the “name over the door” recognising the individual/family’s contribution to creating that successful firm.
    A management buy-out can put undue pressure on a management team, financially as well as in terms of stress, and of course, each manager will be looking for an exit themselves at some point. Indeed, the MBO can be seen as delaying the succession issue rather than solving it.

    The beauty of an employee buy-out is that the seller can dictate the pace of change, and manage their own exit at a pace and level that suits them. Many remain involved in an executive or non executive role, guiding the company into a new future.

    Employee ownership helps ensure that the end product meets not only the needs of the vendor in terms of the realisation of value, but also the needs of the business to enjoy a successful, sustainable future and the needs of the employees in sustaining the skills and wealth in the local community.

  2. Enterprising Scotland : for the long term

    May 22, 2013

    I was privileged last night to be invited to the Glasgow area meeting of the Institute of Chartered Accountants for Scotland to hear John Anderson of the Entrepreneurial Exchange. What an inspirational speaker! John, an accountant to trade, described how he developed a passion for nurturing entrepreneurship, and the measures his organisation put in place to build an entrepreneurial culture in Scotland.

    John doesn’t think our young people are the “lost generation”. It’s their parents who lost their way. Overly reliant on public sector or large corporate employers, ambition was stifled. Entrepreneurs were viewed as Arthur Daley type characters – not a role model to aspire to. For the good of Scotland’s indigenous economy, this had to change.

    Working with US business guru Rosabeth Moss Kanter, John saw the need to o get a real understanding of what makes an entrepreneur. The result of this was “Local Heroes” – a study of Scotland’s successful business leaders. Interestingly, few were graduates. Many had held sales roles within corporates, and started a business in the belief they could do it better. Having profiled these individuals, the challenge was to make entrepreneurs heroic.

    John’s vision was of an “Entrepreneur Eco-System” – a self sustaining infrastructure that would breed, nurture and support successful business. Education is central to this, and John described a primary school where the P7s not only initiated and ran their own social enterprise, but also had succession planning in place to hand over to the P6s! The Young Enterprise Scotland programme gives many young people a taste of running a business, and many universities have programmes in place to foster entrepreneurship. Some local authorities see entrepreneurialism as the key to unlocking potential in our non academic young people and John mentioned Renfrewshire as being particularly proactive. John observes that there is good support out there for pre start and startup business, and would like to see more for growing businesses. The Scottish entrepreneurs who comprise the Exchange’s Hall of Fame are testament to the quality of business in Scotland: Charan Gill, Maitland Mackie, Michelle Mone…it’s a long and varied list.

    This is all great. Scotland has a vibrant enterprising economy with many examples of successful growing businesses. The elephant in the room remains. What happens next? When these entrepreneurs and families sell on, many of these firms will leave Scotland, taking the jobs and skills and wealth with them. The Entrepreneurial Exchange is doing fantastic work in creating a prosperous Scotland. We have to find a way to root these businesses in our economy ensuring a better future for generations to come.

    Selling to employees as an exit option is one way to deliver this sustainability. Many of Scotland’s employee-owned businesses are demonstrating stellar growth driven by entrepreneurial employees. Should we be making employee ownership “heroic” and putting more effort into embedding collaborative working into the curricula of schools and colleges? As John told a captivated audience last night, Scotland is in a better place now than 30 years ago. I see the challenge as making this success sustainable.