By Scott Wright

THE trend of owners putting their businesses into the hands of their employees is gathering pace and can strengthen firms’ resilience in the face of challenging economic conditions.

Law firm Lindsays has declared that it has advised on twice as many employee ownership deals in Scotland this year than it did in the whole of 2021. And partner Douglas Roberts said there is no sign of the trend slowing.

Lindsays has advised on nine deals so far this year that have seen companies placed into employee ownership trusts, following its work on five employee ownership transactions in 2021. It had advised on 15 deals over the four previous years.

There are now nearly 200 employee-owned companies in Scotland, with a target set by the Scottish Government to increase the number to 500 by 2030.

Mr Roberts said: “We are seeing huge demand from companies interested in, then becoming, employee-owned. As well as the transitions we have completed so far this year, a number of other deals are in the pipeline. It’s really encouraging for the Scottish economy.

“Increasing numbers of businesses are realising that employee ownership can work for them. It’s clear from the companies we are involved with that this is a model that can work for any size of company.

“This is a model which brings benefits for everyone. For staff who become employee owners, they secure a controlling stake in their future. For those looking to sell their business, it allows them to secure the future of their company while also managing their departure in a way that works for them.”

Lindsays has this year advised on the moves by Edinburgh’s Kidzcare, Inverness-based Carlton Bingo and Glasgow’s guitarguitar into employee ownership.

The move, which is often pursued for succession-planning reasons, can be tax efficient to company owners, who if certain requirements are met do not pay capital gains tax when they sell. It can also be motivating for staff who inherit stakes in a business.

Mr Roberts said: “The knowledge that staff in EO businesses have that their destiny is in their own hands can be a powerful factor in motivating them to ensure their business is successful and sustainable. They benefit directly from that success.

“As a result, they often stick together and work harder for each other. This encourages innovation, as well as improving performance and productivity. As the number of employee-owned companies grows, that will add an increasingly important layer of resilience to the Scottish economy.”