Employee Ownership in 2021: The Year Reviewed

It has been another superb year for employee ownership. At Fieldfisher, we have helped 16 businesses in 2021 alone achieve this goal, which means that since 2014 we have assisted over 75 businesses move to employee ownership.

What has stood out in 2021 has been:

• the complexity of the deals – for example, one project involved re-registration of a public company as a private company, liaising with the Takeover Panel, a recommended cash offer and a compulsory transfer under the Companies Act;
• the variety of transactions - ranging from the very large multi-million pound businesses to SMEs, which are the backbone of our economy;
• the absence of a "one size fits all approach" – in over 50% of cases there was a need to undertake some form of restructuring or preparatory steps prior to the EO conversion e.g. by incorporating an LLP as a limited company;
• the demand from clients for sophisticated tax structuring and design advice – in approximately 70% of cases we provided bespoke tax advice as well as advising on the implementation of the deal;
• the diversity of the sectors where these new EO businesses operate - we have seen transactions in PR and communications, environmental consultancy, recruitment, design, architecture and planning, to name but a few; and
• the resilience of our clients who made challenging decisions against the backdrop of a global pandemic.

We expect at least one of our 2021 employee-owned clients to move into the top 50 employee owned companies in terms of employee numbers.

It seems that the pandemic has acted as a catalyst for clients exploring this business structure.  Karen Mosley, Managing Director of HLM Architects noted that “the pandemic put certain obstacles in our way, however we emerged from lockdown as an EOT, which provides our colleagues with a sense of connectivity even when we can’t physically be together.  In a post-pandemic world, the EOT model gives employees a sense of purpose; a bond that will not be broken, and supports us in our belief that everything is connected. I would absolutely recommend becoming part of the EOT, empowering employees and allowing them to flourish, which in turn benefits the business.”

Nicola Gilchrist, Chief Operating Officer of Milltown Partners, also managed to capture the excitement of this significant landmark in Milltown Partners' business development: "In 20 years of work I have never been more proud of an achievement than I was this week. After months of planning and preparation we shared that Milltown Partners LLP is becoming an Employee Ownership Trust, passing the ownership of the firm on to the people who work here."

Key 2021 statistics for Fieldfisher are:

• 16 businesses converted to employee trust ownership- more than one every month.
• Founders unlocked over £500m of value from their businesses.
• 50% of these businesses were valued in excess of £25m.
• 2250 new employee owners created.
• 12 transactions were for a sale of 100% of the shares to employees.
• All transactions (with one notable exception) utilised the employee ownership trust model.

With 1 in 20 private company sales in the UK being to employee ownership trusts, we expect the EO growth trajectory to continue in 2022, as the benefits and positive messages on EO become more widely known to business owners, employees and other stakeholders.

At Fieldfisher, we pride ourselves on our practical, no-nonsense advice, backed by our deep understanding of the complex legal requirements, our full service law firm and over 35 years of advising on employee ownership transactions.

Our team figurehead, Graeme Nuttall OBE, authored the seminal Nuttall Review of Employee Ownership in 2012 that led to the introduction of the EOT legislation. We are committed to delivering the spirit of the Nuttall Review by advising flagship employee-owned organisations on maintaining their structures, and working with companies at all stages of the business lifecycle so that they too can benefit from employee ownership.

What the legal directories say about us:

“It is a leading law firm with a wide breadth of expertise. They support us very well” and “Intelligent, insightful, practical and friendly.” Chambers and Partners 2021

“The clear market leader in the creation of employee ownership trusts” and "The level of overall knowledge is excellent and this is borne out by the volume of employee ownership trust transactions that they have carried out for their clients to date.” Legal 500 2021