Report urges finance sector to ‘grab opportunity to invest in EO

UK: It’s time for the finance sector to address a missed opportunity that has resulted in the unmet needs of more than half of the employee owned sector.

This is the finding of a new report published by employee ownership think tank Ownership at Work, entitled Capital Partners? Why it’s time for finance and employee ownership to talk.

Authored by Industry experts Capital for Colleagues’ (C4C) David Gorman and Baxi Partnership’s Ewan Hall, the report highlights that employee ownership is growing quickly through the employee ownership trust (EOT) model, which has seen the likes of Richer Sounds, Riverford Organics and Aardman Animations as well as 300+ SMEs transition to employee ownership in the past few years.

Yet despite the EO sector appearing ideal candidates for lending and investment, the UK’s financial sector has little awareness and even less expertise in engaging with this emerging opportunity and has some catching up to do with increased awareness and knowledge in the accountancy and legal sectors.

Copies of the paper will be shared at an event “Investing in Employee Ownership” on March 16, where representatives from the finance sector will come together to see if they can help identify actions that could be taken and to inform policy. The event, hosted by the Employee Ownership Association  (EOA) at Chartered Accountants Hall, supported by Unity Trust Bank, will see keynote speaker Eric Leenders, Managing Director of Personal Finance, UK Finance, address the important role employee ownership can play in the UK economy and the opportunity it offers to investors and lenders.

Ownership at Work Chair, Ann Tyler, said: “This paper highlights a huge missed opportunity for the UK’s financial institutions. It explores why so many employee owned firms say they can’t access the right finance – despite ticking all the right boxes for lending and investment. The authors suggest finance and employee ownership need to forge a new relationship, and that Government could help to kickstart the process.”

Research linked to the paper shows that EO businesses have reported difficulty accessing the right kind of finance, have experienced poor responses from financial institutions and don’t feel well informed about potential investment sources.

Report co-author Ewan Hall, Director of Baxi Partnership, which provides finance to employee owned organisations, said:  “It is important to be aware of the options and opportunities that external finance can bring to employee owned businesses – both for the businesses themselves and for the finance community.”

His Co-author David Gorman, Partner and Investment Manager for Castlefield, which founded C4C an investment management business for employee owned businesses, added: “Getting the right kind of finance in place for employee owned businesses is critical, yet today we still don’t have enough capital providers engaged in the sector. This paper is part of helping to make that change happen.”

Attendees at the “Investing in Employee Ownership” event will also hear the experiences of employee owned businesses. A session where representatives from the finance and employee ownership sectors will have the opportunity to contribute to policy ideas and identify action will be led by Baroness Sharon Bowles of Berkhamstead – Chair of the Ownership Effect Inquiry which resulted in the 2018 business backed report The Ownership Dividend.

The event, organised by the Employee Ownership Association (EOA) a research partner of Ownership at Work, aims to address the issues raised by this paper.

Deb Oxley OBE, Chief Executive of the EOA, said: “We welcome this report and the further insight it provides on one the key barriers to growing the employee ownership sector in the UK  – we hope it will stimulate some new conversations on the matter at the associated event, which will draw on the experience of the finance sector to support the development of solutions for current and future employee owned businesses.

“As we look to support the government on its agenda to level up in the regions, those in corporate finance are one of a number of key players that need to understand the options that support businesses to survive and thrive in their regional economies at their most vulnerable time – succession.”

 

Download the Capital Partners? Report HERE

For those interested in attending the event, please contact anne.richardson@employeeownership.co.uk or call 01482 692544.