In the current economic climate, it can sometimes be difficult for owners to execute partial or full exit strategies to their satisfaction. Amid soaring inflation, tight M&A financing conditions, falling valuations and general economic uncertainty, owners looking to secure a satisfactory exit that reflects an accurate value for their company can face considerable challenges.These conditions have arguably been a central contributor to the increasing popularity of deals in which a business is sold to an Employee Ownership Trust (EOT). Historically something of a rarity, with the notable exception of the John Lewis Partnership, EOTs are rapidly becoming a useful solution for owners looking to exit their businesses.
Tough Construction is a Glasgow-based construction firm founded in 1974, generating nearly £68 million in revenue and comprising more than 500 staff. In July 2023, the company was acquired by an EOT following the decision of owners Bob Leishman, George Duncan and Kenny MacKenzie, who took over the company in 2007, to retire.
The deal saw the firm become Scotland’s largest employee-owned business and outgoing owner Bob Leishman said it was a reflection of the contribution that staff had made to the company’s success. Leishman asserted that the opportunities, training and development that the company offered to its employees had been key to keeping staff turnover low and driving Tough’s growth.
He added: "A sale to a third party may have disrupted that. This move to employee ownership allows the company to continue to offer excellent service to our clients, and secure employment for our people.”
“A sale to an employee ownership trust lets us have our exit, knowing that the company is in safe hands. We have a talented leadership team ready to take over and it’s time for the old guard to step aside. So far, the news has been well received by staff and clients.”
Langcliffe International is a leading buy-side M&A acquisitions originator based in West Yorkshire. Founded in 2012, the company has grown rapidly across Europe thanks to strong relationships with vendor advisors, private equity firms and corporates.
The company, which introduces deal opportunities in the £3m-£100m value range, has attributed its success to its strong relationships with vendor advisors, its bespoke operating systems and the rapid growth it has seen in Europe, which accounts for more than 50 per cent of its revenue.
In March of this year, the company transitioned to an employee-ownership model, signifying its commitment to empowering its workforce and driving a more inclusive, equitable corporate culture.
The deal saw Managing Director Mark Eardley transfer 73 per cent of his shares to the company’s EOT. The structure also saw an Employee Stock Ownership Plan (ESOP) established, enabling employees to acquire shares in the company.
According to the company, the move to employee ownership is expected to bring significant benefits in terms of improved employee engagement, attracting and retaining talent, alignment of interests in decision-making and strategic planning, wealth creation for employee and an enhanced corporate reputation.
Commenting on the deal, Mark Eardley said: "Selling the company to our employees through the creation of the EOT ensures the stability of the business for the long-term and supports our desire for further international growth.”
“This move recognises the value that our fantastic team has delivered over the years, and it is a very exciting opportunity for each individual to take a pivotal role as the business progresses. Creating a great place to work is fundamental to our business principles, and we’re very excited about the next stage of the journey."
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