Include employee ownership in your Business Succession and Exit planning

Are you looking to maximise the value of your business when it comes time to exit? If so, consider including employee ownership in your succession and exit plan. This can be a powerful way to ensure your business is performing at its peak before and after the exit event.

We use employee share ownership plans with clients to attract, retain, reward and motivate key employees – this part of our business has seen a 400% increase since the beginning of COVID in 2020.

But why exactly should you implement an employee share scheme as part of your exit strategy? Here are a few reasons:

1. Attract the best employees: Offering meaningful equity incentives can be a crucial differentiator in attracting high-quality staff, especially those who may be hesitant to explore a new role without an equity stake. Remember that the size of your employee share scheme should be tailored to the size and nature of your company and your objectives.

2. Retain key people: Retaining your core managers is as important as attracting them. An employee share scheme can provide an added incentive for key employees to stay, especially if they know they stand to walk away with something valuable in the event of an exit. Additionally, an established management team can add significant value to your business on exit, as many buyers are willing to pay a premium.

3. Align behaviours with business objectives: Equity incentives can be a powerful way to ensure your employees are aligned with achieving your ultimate business objectives. By tailoring the incentives to specific goals, you can motivate your team to think and behave in a way that maximises the value of the business.

4. Create opportunities to exit: While the principal value of an employee share scheme is in increasing the business’s overall value, it can also be an effective way to create a market for the owners’ shares or generate competition between potential buyers. As with any commercial objective, careful analysis and the support of a specialist advisor is critical.

In addition to these benefits, businesses with greater employee ownership tend to demonstrate improved employee commitment and engagement. So, not only can an employee share scheme be a valuable tool for your exit strategy, but it can also positively impact your business more broadly. With the right support, you can create a win-win situation for both your business and your employees.

TL;DR

• Including employee ownership in your succession and exit plan can maximise the value of your business.
• Employee share ownership plans can attract, retain, reward, and motivate key employees.
• Offering meaningful equity incentives can attract high-quality staff and retain core managers.
• Equity incentives can align behaviours with business objectives and maximise the value of the business.
• Employee share schemes can create a market for the owners’ shares or generate competition between potential buyers.
• Businesses with greater employee ownership tend to demonstrate improved employee commitment and engagement.