Action to Educate Businesses on EO Succession Could Save Thousands of ‘at risk’ Jobs and Businesses 

The eoa welcomes new research that shows how many business owners will be looking to sell, divest or liquidate their shareholding over the next 10 years.

Image: AdobeStock 

The report 'Generation EO: The Great Succession Opportunity' details how 40% of older business owners intending to sell their stakes in small and medium businesses (10-249 employees) predict the risk of closure without the right buyer.

New research reveals that:

  • Over two thirds of older owners of small and medium-sized businesses (10-249 employees) intend to sell or divest their shareholding over the next 10 years (indicates owners at 120,000 SME firms)
  • Of that group, 43% predict the business will need to find completely new owners or face closure (indicates 51,600 SME firms).
  • 17% of all older owners of SME businesses (10-249 employees) predict liquidation is the likely eventual outcome (indicates 30,000 SME firms employing an estimated 910,000 employees)

'Generation EO: The Great Employee Ownership Succession Opportunity' is published today (November 21 2023) by independent think tank Ownership at Work, in partnership with DJS Research and supported by the Federation of Small Businesses (FSB).

The research argues that after surveying a representative sample of 500 owners of SME businesses (10-249 employees) aged 43 and over, findings suggest at least 8% of all UK businesses with employees (120,000) will face owners selling up in the next 10 years.

Given less than 1 in 10 older owners say they are leaving because the business is in financial difficulty, researchers conclude the vast majority of these SMEs at risk of closing without a suitable buyer are commercially healthy companies.

More worrying still, one third of older owners planning to sell or divest in the next three years are only ‘quite prepared’, and one third selling or divesting at some point in the next 10 years have no plans in place whatsoever. While the research flags a significant risk to the economy, it also concludes that sales to employees might offer a solution that would protect jobs and businesses and provide a huge boost in economic productivity. Owners selling to employees don’t require an external third-party buyer and therefore typically have greater control over timings and – according to the research – report the sale experience to be almost entirely positive.

However, researchers identified a critical knowledge gap among older business owners around employee ownership (EO): 85% understand family succession and 74% trade sales, whereas just 53% know about selling to employees via a trust (currently the most popular route to EO).

Researchers suggest that simply by continuing to grow the numbers of employee owned (EO) businesses at the rate achieved in 2022-23 (37%), in five years’ time the UK would benefit from up to an additional £60bn in economic productivity every year from over 6,800 EO companies (citing recent research that employee owners are 8-12% more productive than peers at non-EO companies on a GVA per employee basis). Over 10 years, this would equate to 1 in 3 shareholding sales – indicating 33,000 – positively affecting the sustainability of thousands of businesses.

Researchers, supporters and sponsors are all urging policymakers to sit up and take notice of these findings which highlight a remarkable opportunity for a generational leap forward in levels of employed ownership whilst saving jobs and keeping thriving businesses operating in local communities.

Campbell McDonald, Chief Executive of independent charitable think tank Ownership at Work, said: “This research has highlighted an unprecedented number of business owners looking to sell up or shut down in the next decade, and there’s a huge risk to the economy if ignored. We know that employee ownership functions as a sustainable, productive succession option that contributes to a stronger, higher skilled, more resilient economy. Supporting the sector with an industrial strategy that does more to accelerate levels of employee ownership could turn this economic risk into a once-in-a-generation succession opportunity.”

Tina McKenzie, Policy Chair, Federation of Small Businesses (FSB), said: “Raising the profile of employee ownership, so more business owners are aware of it as an option, will help to strengthen the business fabric and community of the UK. Growing the number of employee-owned businesses could give a boost to everything from levelling up to the push towards net zero.

“Given the report’s findings around how many owners of businesses with employees are looking to hand on or sell their business in the next decade, there’s a big opportunity to give thousands of employees a greater stake in their firms – and in the economy. The Government can play a part by ensuring that employee ownership trusts retain their benefits in the tax system, and looking at ways to improve awareness of how they can help business owners, employees, and local communities.”

James de le Vingne, Chief Executive of the eoa, said: “Our small section of the UK economy is punching above its weight across multiple dimensions of impact on individuals, businesses, communities and the wider economy

“Employee ownership succession represents a huge opportunity for policymakers, business advisors and, of course, for the several thousand business owners looking to exit their businesses. There is the expertise within the EOA’s community with roadmaps to support this process, however, to scale this support we need government-backed policy and action if we are to avoid a silver tsunami of job and business losses.”

Andy MacInnes, Managing Director for B-Looney, who took the decision to adopt employee ownership six years ago said: “I’ve seen other executives who’ve done trade sales being made redundant. I’ve led two Management Buyouts (MBOs) and this has been a much better experience. Ordinarily you are working against the buyers to get their deferred considerations. In an Employee Ownership Trust (EOT) we are all working together.

“It was really good fun getting staff involved and being able to say it’s your company now. It was a lovely feeling of handing the firm on to staff, many of whom have been here for years.”

Gerry Young, Founder Director of RVE, a corporate finance advisory firm that advises business owners on the options for sale of their business, who supported B-Looney, said: “This reinforces our long-held belief that when businesses owners are looking at exit options, they should strongly consider the sale of the business to an Employee Ownership Trust. As the reports’ respondents describe, not only do you achieve a fair market price for the business you secure an independent future for the business and its employees.”

Ravi Anand, MD of ThinCats, a leading alternative finance provider of funding to mid-sized SMEs said: “Although we are seeing increasing interest from business owners and their advisers about funding EOT transactions, this report puts some real numbers behind the size of the opportunity and the potential challenges, including relatively low levels of understanding. “These findings not only highlight the genuine social and economic benefits offered by employee ownership, but also the need for much more information and support for business owners and their employees on how to make the transition to an EO model.”

JGadd Associates, which has partnered with another eoa member Telos Partners, believes there is enough insight and support for SMEs to navigate becoming employee owned and that it is getting them to plan for succession that is the imperative. In their joint article The Road to Succession, Telos and JGadd offer tips from experienced hands that focus on the leadership succession aspect of an EO transition, offering insights and advice gathered from those who have navigated the intricacies of leadership succession in EOBs.

Share your insights and good news stories directly to our thriving community in the eo Hub. If you’re not already signed up, create a profile today and join thousands of others in our exclusive online member area. 

For anything related to stories, please email Dominic

For media enquires, contact Keely

21 Jun 2024
EO Day 2024 – Proudly Showcasing the Answer to a More Thriving and Resilient UK Economy
From Scotland down to Cornwall, from Wales across to Hull, businesses that are growing and investing in the UK for the longer term are celebrating and raising awareness of a growing sector that is #ProudlyEO
19 Jun 2024
EO Emerges as Best Succession Option for Tech and Digital Transformation Consultants, PTS Consulting
After exploring all possible succession routes, employee ownership emerged as the best way forward for technology and digital transformation consultants PTS Consulting (PTS).
17 Jun 2024
How Employee Ownership Enables LGBTQIA+ People to Thrive
By distributing ownership and giving everyone a stake and a say, EO fosters workplaces where LGBTQIA+ employees can flourish, leading to a more equitable and representative corporate landscape. Join us for a closer look this Pride Month.
13 Jun 2024
CEO Blog Manifesto Week - No Upsets, No Big Surprises, But Plenty to Build on
James de le Vingne, Chief Exec of the eoa, dives into the manifestoes released this week, what they mean for employee ownership, and his hopes for an incoming government.
11 Jun 2024
Celebrating Financial Freedom with EO Day
Back in 2018, The 1:1 Diet by Cambridge Weight Plan used EO Day 2018 to announce its financial freedom. Here, our EO Day 24 sponsor relives a special day that will forever remain as a milestone moment for the business.
03 Jun 2024
How Britain’s First LGBTQ+ Certified Business Used EO to Better Embed EDI
For Pride Month, we spoke to Ed Riseman from eoa member The Big Group about running a business as an LGBTQ+ person and how employee ownership weaves EDI in the workplace to benefit all employees.
24 May 2024
The Power of Sensitive Succession Planning – Takeaways from our Scottish EO Exchange
This week, a cross section of Scotland’s employee owned sector came together in Edinburgh for our EO Exchange based around succession planning – sharing insights and experience amid news that Scottish EO businesses are skyrocketing.
22 May 2024
eoa Celebrates Third ‘Ownership Hub’ Pilot Launch in West Midlands
In partnership with the eoa, the West Midlands Combined Authority has launched its Ownership Hub project to grow employee and worker ownership in the region’s arts and creative sectors.
20 May 2024
Five Ways to Supercharge your EO at the eoa Annual Conference
Baxendale Employee Ownership, sponsors of the eoa Annual Conference for a third year running, break down five reasons why you should attend.
14 May 2024
eoa Launches Manifesto for Gov to Incentivise, Support, and Unlock UK EO Potential
The eoa has officially launched its manifesto calling on Government to unlock the potential of the UK’s employee owned sector.
03 May 2024
Ireland Makes History with its First Employee Ownership Trust
Ireland has announced its very first employee ownership transition using the employee ownership trust model – potentially paving the way for a vibrant new era of Irish employee ownership.
02 May 2024
Inspiration For EO Day – 50 Days to Go!
A handy guide to help you celebrate your employee ownership pride and make EO Day 2024 bigger and better than ever.
30 Apr 2024
‘A vehicle for unleashing employees’ potential’ – The Industry Club Goes EO
Creative recruiter, The Industry Club, has marked its thirteenth year by transitioning to employee ownership.
25 Apr 2024
CEO Blog: New eoa - Shaping the Future
James de le Vingne, CEO of the eoa, reflects on everything we unveiled at the People Powdered Business event and explores the exciting launches we've got planned for the next few months.
17 Apr 2024
Employee Ownership Underpins Scott and Fyfe’s Incredible Turnaround
Scott and Fyfe, a pioneering technical textiles company, has announced impressive profits which it attributes in part to employee ownership.
10 Apr 2024
Optimum Coatings Ushers in Era of Business Success in Morecambe with Move to EO
Optimum Coatings has reaffirmed its commitment to its vibrant local community, recognised the contributions of its employees, and secured long-term business stability by transitioning to an Employee Ownership Trust (EOT).
08 Apr 2024
Demonstrate Your Employee Ownership Pride Ahead of EO Day
We’re rapidly approaching the twelfth annual EO Day, uniting the sector to celebrate the power of Great EO.
02 Apr 2024
eoa Welcomes Graeme Nuttall OBE as its First Official Ambassador
Graeme Nuttall OBE has joined the eoa as International Ambassador, with a focus on developing and promoting international best practice for employee ownership.
28 Mar 2024
Interact Becomes the First Employee Owned Contact Centre Outsourcer
Interact has become the UK’s first employee owned contact centre outsourcer after selling the majority of its shares into an Employee Ownership Trust
13 Mar 2024
The Countdown is on to Celebrate ‘Proudly EO’ Businesses for EO Day
There’s only a 100 days until this year’s EO Day. We guarantee it’ll be here before you know it. So mark your calendars for Friday June 21, appoint an EO Day lead, and/or assemble your team, and plan your EO Day activity.
11 Mar 2024
Purplefish Announces Transition to Employee Ownership
Purplefish has become the first PR agency in Bristol to make the move to employee ownership after founder Joanna Randall sold all of her shares to an Employee Owned Trust.
08 Mar 2024
Empowering Equality: The Impact of Employee Ownership on Gender Diversity in Business
We spoke to a few of the female senior leaders in the eoa community to understand how a variety of EOBs from across different industries are empowering women.
07 Mar 2024
What Does the Spring Budget Mean for Employee Ownership?
The Spring Budget presents missed opportunities in building a more prosperous economy; developing the role of EO, and further unlocking its impacts for businesses, employees, and our wider society.
07 Mar 2024
eoa Backs Calls for Policy Reform to Fix UK Economy
A cross-sector report launched today in Parliament by the Future Economy Alliance calls for a dedicated UK Government Minister to overhaul economic policy.
21 Dec 2023
eoa Part Of Collective to Engage with Government On Future Economy
The eoa attended a meeting with Business Minister Kevin Hollinrake and the Prime Minister’s Business Adviser Franck Petitgas, as part of a collective to discuss the key issues of interest to employee owned, family and small businesses
29 Nov 2023
Employee Ownership Pioneers and Exemplars Celebrated at EO Sector Awards
A night of celebration was enjoyed by 800+ people at the UK Employee Ownership Awards, at the ACC Liverpool, last night (Monday 27th November 2023) with five winners celebrating success.
21 Nov 2023
Action to Educate Businesses on EO Succession Could Save Thousands of ‘at risk’ Jobs and Businesses
The eoa welcomes research that shows how many business owners will be looking to sell, divest or liquidate their shareholding over the next 10 years in the report 'Generation EO: The Great Succession Opportunity'.
21 Sep 2023
eoa Responds to Government Consultation on EOTS and EBTs
The eoa has submitted its response to the government's consultation on EOTs and supported its members to do the same - as part of its policy priority to ensure the conditions for employee ownership to grow.
31 Aug 2023
Why we’re Sharing our Policy Priorities for the EO Sector
We have worked with our members to co-produce our policy priorities to make sure their interests and that of the EO sector is represented in our influencing work.