Co-operative Development Scotland

The boss of one of the UK's best known employee owned companies is to urge family firms in Scotand to consider selling their business to the staff.

Bruce Davidson, Managing Director of Loch Fyne Oysters, will showcase employee ownership as a succession option in Edinburgh on 27 October 2009 at a special event hosted by The Scottish Family Business Association and Co-operative Development Scotland.

Loch Fyne Oysters has been employee owned since 2003, when it was put up for sale following the sudden death of co-founder Johnny Noble. The company was sold to a trust representing all 100-plus staff, and financed by Royal Bank of Scotland and Baxi Partnership, the employee buyout specialist. Many potential employee buyouts teams are worried about finance, however the Loch Fyne Oysters story shows that finance is readily available, and indeed lenders generally see employee-owned businesses as good investment prospects due to their higher productivity and greater resilience to the ebb and flow of business.

Since the EBO, the business has grown into an internationally renowned producer and retailer of sustainably-produced oysters, mussels, smoked products and seafood.

Family businesses are generally anchored in the places they've been started and are looking for continuity within their communities.

Davidson explained:

Employee ownership is a very positive way of achieving that, and of rewarding the loyalty of employees and their families who may have been with the business for a long time. Alternative exit options such as a trade sale or management buyout can lead to job losses or relocation. Employee ownership also enables long-term planning, without the short-term pressure to make profits that an external acquirer would demand.

Davidson also highlights the performance benefits of employee participation and buy-in. During a recent downturn in business due to the recession, the staff unanimously voted to take a pay cut to aid cash flow over a six-month period.

The employees feel they are working for a company with a high degree of loyalty and are willing to make a personal sacrifice.

Davidson explained:

"Staff turnover has also fallen since the employee buyout. Because people are getting more information, they can see the way the company is progressing and are keener to stay.

Sarah Deas, Chief Executive of Co-operative Development Scotland, believes many family-owned businesses will be attracted to an employee buyout:

The continuity of a family business is one of the biggest concerns for its owners, particularly if the business has been carefully managed across many generations. The sale of the business to a loyal and committed workforce is one of the most effective ways of securing the future of the business whilst also providing the owners with a successful exit.

According to the Scottish Family Business Association (SFBA), only 33 per cent of family businesses make it to the second generation and 9 per cent to the third.

The SFBA 'Exploring the EBO Options' workshop takes place on Tuesday 27 October 2009, 9.15am to 12.15pm at The Corporate Suite, Lloyds TSB Scotland, Henry Duncan House, 120 George Street, Edinburgh EH2 4LH.

Places are limited and can be booked via the SFBA on 01698 723346

Visit the SFBA website to book your place at Exploring the EBO Options workshop