Employee Owned businesses ‘keep on moving’ as they celebrate 5th EO Day
Employee Owned businesses ‘keep on moving’ as they celebrate 5th EO Day
Five employee owned businesses in Wales
As part of our fortnight of employee ownership themed activities we are helping the Employee Ownership Association to celebrate the 5th annual Employee Ownership Day today.
EO Day is the national celebration of employee ownership and a major opportunity to raise awareness of the economic benefits and positive impact the sector has on the UK economy. In Wales, employee ownership has made an impact across many sectors from retail and consultancy, to manufacture, food, computer software, scientific measurement and dentistry.
EO Day’s theme this year is ’five’, so here are five employee owned business currently ‘keeping on moving’ in Wales.
Tregroes Waffles is a family run Bakery based in the Teifi Valley in South-West Wales. The company was created in 1983 as a way of generating an income for the owner and his family in an area with difficult and highly seasonal labour market conditions. The business initially traded its signature products, the waffles, through stalls at markets and fairs throughout Wales.
The business has grown exponentially to a situation where it now produces up to 4,000 Waffles per hour, and supplies most of the leading supermarkets as well as numerous independent delicatessens, coffee shops and cafés within the Welsh Borders and beyond. The company makes a healthy profit and employs 15 people. Recruiting locally, the business remains strongly embedded in the local community.
The owner of Tregroes Waffles began to explore the concept of Employee Ownership four or five years before the transition started taking place. He attended a breakfast seminar hosted by the Wales Co-operative Centre where he heard from a business owner who had successfully implemented a long-term transition of his business from a privately-owned model to a 100% employee owned model.
The owner contacted Social Business Wales who worked with him to examine the succession options open to him and to look at the best approaches for his longer-term aspirations. The Social Business Wales team helped develop the strategy and the new business models. They supported the business owner to set up an Employee Ownership Trust and worked with him on approaches to engage his employees in the processes and benefits of employee ownership.
At this point, the original owner retains 90% of shares and remains the Director of the company. He continues to enjoy the work and hasn’t reduced his workload or responsibilities to date. Recognising the fact, however, that he had invested his early entrepreneurial drive in the business, but was now possibly becoming too risk-averse, he felt that retaining sole ownership might hold the business back. He therefore decided to hand more responsibilities to the employees and to bring others with more energy and drive into more senior roles in the company.
Serving some of the world’s leading companies, Gwynedd-based ETL Solutions started life in 2002 as a management buyout of PrismTech’s Transformation Manager technology, a data migration software.
When the founding director who had led the management buyout was approaching retirement, a number of exit options were considered. It became clear that venture capitalists’ interest was in owning the software only, not in retaining employees. This ran counter to the founding director’s intentions. Employee ownership was therefore considered as a way of ensuring continuity while offering a tax efficient exit route.
Converting ETL into an employee owned company was a two-year process and was not accomplished until 2016. A separate company was set up to hold all the shares on behalf of the employees. The company’s cash surplus was used to purchase most of the shares with the remaining shares paid through a deferred payment plan to be paid in instalments over three years, which avoided having to take out a loan. All employees were treated equally and none owned any shares directly.
Social Business Wales supported ETL throughout the employee ownership transition process. They worked with both the pre-existing management and the employee team to explore the different employee ownership models and their implications and then helped them design the preferred approach to the transition to employee ownership. Social Business Wales were instrumental in brokering and supporting the eventual deal structure and provided support in management approaches, setting up an employee forum approach, employee training in governance and the role of a Board and sharing of responsibilities.
PrimePac Solutions Ltd
PrimePac Solutions Ltd, is an employee owned business that fills bottles, sachets and tubes for clients including leading brands in the health and personal care sector.
The business was formed when their parent company decided to withdraw from Wales following a major fire which destroyed their packing facilities. Until the fire in 2005, 140 people were employed by Budelpack Rumney. When the news broke that the company was not going to reinvest in the area, a group of employees contacted the management of Tower Colliery, who had famously formed a worker co-operative to buy their pit from the National Coal Board, who pointed them in the direction of the Wales Co-operative Centre.
Knowing Budelpack’s strategy of high volumes and low margins the group were able to put together a business plan based on low volumes and high margins and staff members decided to invest their redundancy payment into setting up a new employee owned company. 19 employees were needed to start up the new company and they were oversubscribed by 100%. After much negotiation, the employees managed to purchase necessary equipment from Budelpack and began trading in October 2005.
With manufacturing jobs on the decline in Wales the staff were keen to preserve their livelihoods and keep jobs in the local area. The Wales Cooperative Centre provided legal and business planning advice and helped the company access funding from Co-operative and Community Finance, Finance Wales and the Welsh Government.
Since 2007, PrimePac Solutions Ltd has seen a year on year increase in turnover and budget. The firm has paid out dividends to shareholders greater than the amount they invested at the start.
In 2012, Primepac Solutions won the prestigious Productivity and Performance Award at the national Employee Ownership Conference in Birmingham. The award showcases the most dramatic and powerful examples of employee owned organisations driving up levels of productivity to deliver improved performance, and leading to exemplary outcomes in a particular field.
Caffi Florence is an award winning café, specialising in fresh, seasonal, homemade and locally sourced produce, based at Loggerheads Country Park near Mold.
A co-operative of seven café employees purchased the popular Caffi Florence in Loggerheads Country Park. The previous owner had been keen that the café continued using the principles of local food sourcing and preparation from scratch. Passing the business on to the employees was undoubtedly the best way to achieve this. She had discussed the potential for employee ownership at a very early stage, identifying a core group who would be able to step up to the demands of running the business. The knowledge that the staff were keen to take over and that they had the skills to do so helped her to make the final decision to leave.
The new owners believe that they have the potential to take the business and grow it further using the principles set out by its original owner.
Caffi Florence is a sustainable business that has been run on strong ethical lines and with high quality standards for a number of years. The success of the business under the new ownership proves how important the employees are to the sustainability and growth potential of any business.
Staff from the Wales Co-operative Centre were able to broker this business transition as a result of funding from the Welsh Government and European Union.
The deal benefited from the support of Denbighshire County Council who own the café premises and backed the formation of the co-operative.
Gateway OHS Dental Practice
Gateway OHS Limited was established in 2007 as a brand-new NHS dental practice in Abergavenny. Set up by the principal dentist, the business was originally established as a three-surgery practice, but expanded into a four-surgery practice soon afterwards. Gateway now provides NHS dental care to over 10,000 residents in the region.
Since it was established, there has always been a strong culture of innovation within the organisation and a desire to explore new initiatives.
Coinciding with the principal dentist exploring succession options in 2016, the employee-owned business model seemed to be the perfect fit. Dental practices are typically sold in one of two ways – either to a young practitioner who wants to build their own practice, or to a corporate dental company. Rewarding the staff who had built the practice over the years was not feasible either through the former, because it would not have been feasible for a young practitioner to purchase a four-surgery practice, or the latter, because operating in a profit-driven environment, corporate dental companies have a poor record of looking after staff and providing an innovative service.
With support from Social Business Wales, and based on considering different options, an employee owned model was decided as the optimal route forward, because it enabled the principal dentist to leave the business in the hands of people who had been entrusted with the business over the years and who were passionate about seeing it prosper.
This is the first Dental Practice to transition to employee ownership in Wales. Consequently, Social Business Wales was involved in every step of the process from visioning and strategic planning to developing and implementing the deal structure utilised in the eventual business transfer.
An immediate impact felt within the practice was that staff feel much closer as a team. It has rekindled the ambition to put clients and communities first and shape services to meet their health and well-being needs. The ambition is for Gateway to become a model for sustainable healthcare practices across Wales.
Social Business Wales is home to Wales’ leading experts in employee ownership. If you would like to speak to one of our business advisers to discuss the opportunities employee ownership could offer you and your business, please contact us via the website Social Business Wales or by calling 03000 6 03000, quoting ‘EO2017’. We will be pleased to speak to you on a no obligation basis to discuss whether employee ownership is a suitable option for you.
Social Business Wales is funded by Welsh Government and the European Regional Development Fund. It is delivered by the Wales Co-operative Centre and is part of the Business Wales service.