Posts Tagged ‘exit strategy’
On April 6th 2014, the UK Government will formally launch a range of tax incentives to help grow the employee ownership sector. There will be an exemption from income tax of £3,600 for certain payments made to employees of qualifying employee-owned companies, and the introduction of a relief from capital gains tax (CGT) for owners selling a controlling interest to a trust which operates for the benefit of all employees. Finally, a tax hook on which to promote employee ownership to those business owners considering their business succession options!!
Although the Centre is disappointed that direct forms of employee ownership, such as the worker co-operative model, have not been recognised, this is still a significant milestone for employee ownership. The tax incentives headline what has been a very busy 18 months of UK policy development in this area, stimulated in the main by the recommendations in the 2012 Nuttall Review of Employee Ownership, ‘Sharing Success ‘
To us at the Wales Co-operative Centre, employee ownership is an economic ‘no brainer’. Giving employees an ownership stake in a business changes their relationship with the business and encourages them to take a positive and proactive role in helping their company grow. Recent research by the Cass Business School supports this by showing that employee owned businesses are more stable and more resilient as a direct result of the employees gaining a real stake in the success of that business.
Here in Wales, we see employee ownership as a crucial succession option which can help keep jobs, business and skills in Wales. Unfortunately it is often the forgotten succession option, not being viewed as a mainstream idea by conventional business advisers. At the Wales Co-operative Centre, we have received support from Welsh Government and European Union Regional Development funding to implement employee ownership in Wales and are actively working with both businesses and advisers to put employee ownership firmly in the mainstream.
To mark the introduction of the new tax regime for employee ownership, the Wales Co-operative Centre is hosting a number of breakfast seminars looking at the benefits of employee ownership and how the new tax incentives can benefit business owners who would like to move on from the business.
The events in Cardiff, Carmarthen and Bodnant in North Wales will also consider the employee trust, how it fits with your business model, and the benefits of the model for the business owner and the employees. The seminars will be of interest to business owners interested in looking at their exit strategies and to business advisors who want to know more about the approach to advise their clients. To find out more click here.
In our view, tax should not be the sole driving factor to considering employee ownership. Many of our clients are driven by legacy, and see employee ownership as an approach that engages employees and puts them in charge of their own futures. It helps retain jobs and provides a platform for continued local business ownership and growth. However, having an additional incentive to help promote the employee ownership exit route is never a bad thing and we’ll be working hard to promote the new relief available to business owners here in Wales.
Let’s just hope those clever tax specialists don’t find some loophole which allows companies to abuse the incentive for purposes other than employee ownership, otherwise we could see it withdrawn from the market as quick as at arrived.
Further information can be found on the Wales Co-operative Centres Website http://www.walescooperative.org
Places can be booked directly by calling the Centre on 0300 111 5050.
Rhian Edwards is manager of the ERDF and Welsh Government Business Succession project at the Wales Co-operative Centre. Her team works with micro-businesses and SME’s across Wales to develop employee ownership approaches and employee ownership based succession planning.
New Capital Gains Tax rules encourage owners to sell to their staff / Rheolau newydd ar gyfer Treth ar Enillion Cyfalaf yn annog perchnogion busnes i werthu i’w staff
Business owners across the UK could be benefiting from selling their businesses to their employees when new Capital Gains Tax Reliefs come into force this April. Business owners who sell a controlling stake in their company to an Employee Share Trust, which is owned and run by all the businesses employees will be able to benefit from drastically reduced tax on the profit from the sale.
In Wales, the Wales Co-operative Centre is hosting a number of breakfast seminars looking at the benefits of employee ownership and how the new tax incentives can benefit business owners who would like to move on from the business.
The events in Cardiff, Carmarthen and Bodnant in North Wales will also consider the employee owned trust model, how employee ownership works and the benefits for the business owner and the employees.
The seminars will be of interest to business owners interested in looking at their exit strategies and to business advisors who want to know more about the approach..
Rhian Edwards is Manager of the Welsh Government and ERDF funded Succession project at the Wales Co-operative Centre. She commented,
“This new tax relief makes it extremely attractive for business owners to consider employee ownership as a planned exit strategy. It offers the best of both worlds, a tax efficient exit strategy and an approach that engages employees and puts them in charge of their own futures”.
Further information can be found on the Wales Co-operative Centres Website http://www.walescooperative.org/capital-gains-tax-events.
Places can be booked directly by calling the Centre on 0300 111 5050
Gallai perchnogion busnes ledled y DU elwa ar werthu eu busnesau i’w gweithwyr pan ddaw Ryddhad Treth ar Enillion Cyfalaf newydd i rym fis Ebrill eleni. Bydd perchnogion busnes sy’n gwerthu cyfran reoli yn eu cwmni i Ymddiriedolaeth Perchnogaeth Gweithwyr, sy’n eiddo i holl weithwyr y busnes ac yn cael ei reoli ganddynt, yn gallu elwa ar ostyngiad treth enfawr ar yr elw o’r gwerthiant.
Yng Nghymru, mae Canolfan Cydweithredol Cymru’n cynnal nifer o seminarau brecwast i edrych ar fanteision perchnogaeth gweithwyr a sut y gall y cymhelliant treth newydd fod yn fuddiol i berchnogion busnes a hoffai symud ymlaen o’r busnes.
Bydd y digwyddiadau yng Nghaerdydd, Caerfyrddin a Bodnant yng Ngogledd Cymru hefyd yn ystyried yr ymddiriedolaethau newydd, sut y mae perchnogaeth gweithwyr yn gweithio a’r manteision ar gyfer perchennog y busnes a’r gweithwyr.
Bydd y seminarau o ddiddordeb i berchnogion busnes sydd â diddordeb mewn ystyried eu strategaethau ymadael ac i ymgynghorwyr busnes sy’n dymuno gwybod rhagor am yr ymagwedd er mwyn cynghori’u cleientiaid.
Rhian Edwards yw Rheolwr y prosiect Olyniaeth dan nawdd Llywodraeth Cymru a Chronfa Datblygu Rhanbarthol Ewrop yng Nghanolfan Cydweithredol Cymru. Dywedodd,
“Mae’r rhyddhad treth newydd hwn yn hynod o ddeniadol i berchnogion busnes ystyried perchnogaeth gweithwyr yn strategaeth ymadael fwriadol. Mae’n cynnig y gorau o ddau fyd, sef strategaeth ymadael sy’n effeithlon o ran treth ac ymagwedd sy’n ymglymu gweithwyr a’u gwneud yn gyfrifol am eu dyfodol eu hunain.”
Mae rhagor o wybodaeth ar gael ar wefan Canolfan Cydweithredol Cymru http://www.walescooperative.org/capital-gains-tax-events.
Gellir cadw lle’n uniongyrchol hefyd trwy ffonio’r Ganolfan ar 0300 111 5050
Wales Co-operative Centre
The Wales Co-operative Centre was set up thirty years ago and ever since has been helping businesses grow, people to find work and communities to tackle the issues that matter to them. Its advisors work co-operatively across Wales, providing expert, flexible and reliable support to develop sustainable businesses and strong, inclusive communities. www.walescooperative.org
Succession and Consortia Project
The Wales Co-operative Centre’s Succession and Consortia project is funded by Welsh Government and European Regional Development Fund. It offers support to business owners and employees considering employee ownership and creation of worker co-operatives. It also offers support to businesses working to work together to form co-operative consortia.
Canolfan Cydweithredol Cymru
Sefydlwyd Canolfan Cydweithredol Cymru ddeng mlynedd ar hugain yn ôl ac ers hynny bu’n helpu busnesau i dyfu, pobl i gael gwaith a chymunedau i ddatrys y problemau sydd o bwys iddynt. Mae ymgynghorwyr y Ganolfan yn gweithio’n gydweithredol ledled Cymru, gan ddarparu cefnogaeth arbenigol, hyblyg a dibynadwy er mwyn datblygu busnesau cynaliadwy a chymunedau cadarn a chynhwysol. www.walescooperative.org
Prosiect Olyniaeth a Chonsortia
Ariannir prosiect Olyniaeth a Chonsortia Canolfan Cydweithredol Cymru gan Lywodraeth Cymru a Chronfa Datblygu Rhanbarthol Ewrop. Mae’n cynnig cefnogaeth i berchnogion busnes a gweithwyr sy’n ystyried perchnogaeth gweithwyr a chreu mentrau cydweithredol y gweithwyr. Mae hefyd yn cynnig cefnogaeth i fusnesau sy’n gweithio ar gydweithio i ffurfio consortia cydweithredol.
Wales Co-operative Centre Business Succession Project Manager Rhian Edwards joins playwright Gary Owen to discuss the benefits of worker co-operatives. With Dr Who and Torchwood writer Helen Raynor, Gary has created and written the hugely successful BBC Wales drama Baker Boys.
Rhian manages a project which works with business owners and employee groups, like those in Valleys Bara, exploring employee ownership options and forming worker co-operatives.
We’re really interested to find out why you decided to write a drama about worker co-operatives?
Gary Owen: Looking around when we were coming up with the idea, we felt there were a lot of great TV shows set either in a fantasy/science fiction world, like Dr Who and Merlin, and a lot of shows set in a heightened version of the real world (things like Spooks, Mistresses, Shameless). But there wasn’t much original drama dealing with gritty reality as most people experience it – and yet everyday life is full of drama! So that was our first thought, to write something that dealt with the drama of everyday life. Then within that real world, we wanted to write something that would be hopeful and optimistic. When you look at TV shows that are described as ‘aspirational’, often they’re about glossy people owning nice things and leading glamorous lives. And obviously owning nice things is great – I love my iPad! – but nice things aren’t what really matter. What matters are things like having a roof over your head, a way to put food on the table, being able to make sure those you love are safe and happy, and feeling you have a bit of control over your life. And with those ideas in our heads, it was actually Helen who thought of Tower Colliery, and came up with the idea of setting a drama in a factory which had been bought out by the workforce and run as a co-operative.
Rhian Edwards: We’re really pleased that the Baker Boys is helping bring the worker co-operative model into the mainstream. Through our project we’re promoting the worker co-operative model across business sectors and Baker Boys will help spread the message that a worker co-operative is a business model that can safeguard jobs and can give people the opportunity to become business owners and directly benefit from what they put into the business.
Gary, now you know more about the model, what do you think are the advantages of a worker buy-out or a worker co-operative?
GO: I think there’s statistical evidence to show that productivity is usually higher in co-operatives than in other kinds of business, because people know the extra effort they put in will come back to them, rather than just boosting profits for whoever owns the business. And a business that provides a service to the public and a living to its workforce is a perfectly viable if run as a co-op; that business might not be considered viable by a corporation who are also looking for it to generate them a profit, and who might then just shut it down. Co-ops will have different priorities to profit-maximising businesses in other ways, too. I think I’m right in saying that the safety record at Tower Colliery was exemplary – because, of course, a worker run co-op is going to put the highest possible priority on the safety of the workforce.
RE: I agree. People are at the heart of worker co-operatives. They give employees an opportunity to steer the development of the business. There is evidence to show that during periods of economic down turn, worker co-operatives are more resilient than conventionally structured businesses because the employees have a stake in the business and there’s more collective effort. From the owners point of view, an employee buy-out gives the business owner a viable option to consider when planning their exit from the business. Many of the business owners we’re currently working with have looked at third party sales, but didn’t feel confident that the buyers would protect their employees. For lots of owners this is a major concern and an obstacle to the sale. An employee buy-out gives the owner their desired exit route while putting the business into the hands of the employees who are people who know it the best.
Given that you feel the model has many advantages, how relevant do you think this approach is in the current economic climate?
GO: I think it’s incredibly relevant! There’s been a lot of talk since the financial crisis began about ‘the market being broken’ – but I don’t think that’s quite right. It’s not the mechanism of the market itself that has caused our problems – it’s that there are incredibly powerful corporations acting within the market system which exist only to maximise profits, and which have little incentive to worry about environmental or social damage they cause. Co-ops and other organisations that exist to fulfil social goals can work perfectly well in the market system, and could make markets serve society rather than wrecking it.
RE: That’s right. Co-operative business models are more than just about short termism and quick profit. The co-operative principles include member economic participation, education and concern for the community. Co-operatives are about empowering those who work for them and also about keeping valuable services within our local communities. Worker co-operatives help safeguard jobs which is very significant to the local and national economy in the current climate.
No business is without its dramas, and your drama picks up on the challenges of running a worker co-operative – what do you think are the biggest challenges a fledging worker co-operative would face?
GO: From research we’ve done, it seems there a shift of mindset involved in getting people from being simply employees of a business, to thinking of themselves as being co-owners. I remember reading in ‘Local Heroes’, David Erdal’s book about how the Loch Fyne oyster business was turned into a co-operative, it took a while for some people who had previously been ‘just’ workers on the shop floor to get used to standing up in finance meetings and questioning the decisions of the management.
RE: Yes that’s definitely one of the key challenges the employees face, the transition from being an employee one day to owner the next. It’s really important that everyone involved in a worker co-operative fully understands their role and responsibilities as employees and their rights as owners. And, it’s very important that the two don’t get blurred. Our business succession service works directly with employees to give them detailed training and support through this process as we think this is crucial to help establish a solid foundation for the business moving forward. Funding the co-operative is also a challenge. Providers of finance won’t lend to a business just because its structured as a worker co-operative. The employees need to show that the business is a viable business and it has real potential for growth. We work with employees to help them put together realistic business plans that will secure the necessary start up investment and get the business up and running.
Are there any real life examples that inspired you to write the drama?
GO: First and foremost, Tower Colliery, as I’ve already mentioned. And then in a more rural context, we knew that lots of villages were forming co-operatives and managing to re-open pubs and post offices, after they’d failed as purely commercial enterprises. And the finally we looked at the Mondragon Co-operative in the Basque to find out how a co-op might respond when it hit hard times. And I’ll stop talking there, for fear of giving away the storyline!
RE: The worker co-operative model is prevalent across the UK, Europe, USA and South American, and as you’ve pointed out, the Mondragon Co-operative and Tower Colliery have both become leading lights. In Wales, we’ve got some excellent examples of successful viable businesses structured as worker co-operatives. Primepac Solutions Ltd, Aber Instruments, and Science Workshops are all examples of businesses that have employee ownership at their core while being successful businesses in their respective fields.
Gary, many thanks for talking to us today. You’ve given us a real insight into why you wrote Baker Boys and we hope the series will be a huge success and will inspire more people to think about employee ownership as a credible business model. We’re looking forward to catching the first episode of Series Two on Thursday.
To speak to someone from the business succession team at the Wales Co-operative Centre, please call 0300 111 5050, email us on firstname.lastname@example.org or visit the Wales Co-operative Centre website via this link.
To follow our blogs on Baker Boys as the series progresses, follow the hashtags #Bakerboys and #walescooperative and check our blog https://walescooperative.wordpress.com/
The Wales Co-operative Centre was set up thirty years ago and ever since we’ve been helping businesses grow, people to find work and communities to tackle the issues that matter to them. Our advisors work co-operatively across Wales, providing expert, flexible and reliable support to develop sustainable businesses and strong, inclusive communities.
Baker Boys Series 2 Episode 1 is scheduled for transmission on BBC1 Wales on Thursday 24th November at 9pm. The episode will be available on iplayer here after broadcast
The BBC Wales drama following a group of employees who buy out their bakery when their parent company tries to close it returns for a second series on Thursday 24th November.
The original series followed the trials and tribulations of the bakery staff as they formed a buy-out team and raised the finances to take over the company. The series examined the issues a real buy out team would face – distrust, initial reluctance, the fear of investing redundancy payments and the effects that the process can have on relationships with family and friends.
During the screening of the next series, we will be publishing a series of short blogs about key themes that are raised in the show.
To find out more, follow @WalesCoOp and the hashtags #bakerboys and #walescooperative and check our blog https://walescooperative.wordpress.com/ for regular updates.
For a quick reminder of the first series visit the BBC Website here and click here for a Western Mail interview with star Eve Myles