Fife-based precision engineers GS Brown Limited have moved into employee ownership with the help of EQ Chartered Accountants.
Owners Des and Mike Brown transferred the majority of the shareholding to a trust for the benefit of the company’s 27 employees at the Ladybank company.
Established in 1974, the second generation family business has a worldwide reputation for excellence in precision engineering.
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The company is recognised as a progressive manufacturing facility providing high precision engineering components and assemblies, in medium to high volume, for the hydraulics, robotics, telecommunications and instrumentation sectors.
70% of the shareholding will be held in an Employee Ownership Trust, with the family retaining 30%, demonstrating the family’s ongoing commitment to the business. One of the conditions of the deal is that any future sale of the company requires the agreement of 80% of the workforce.
The move was part of the succession plans for the family owners. Managing director Des Brown plans to remain as managing director for the medium term and, with Mike semi-retired, both brothers wanted the business to remain local.
Des Brown said: “The majority of our staff have been with us a very long time. We have our reputation and our customers because our staff do a very good job. A sale to an external buyer would have been too disruptive. By transferring to an Employee Trust we have a long term structure where we can continue as before, and maintain our relationships with customers and suppliers.”
Dougie Rae, a partner at EQ who assisted the company with valuation and trust tax benefits, said: “The Employee Ownership Trust is certainly one route worth considering for business owners considering their succession options.
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"A sale to an Employee Trust can deliver a tax effective means to realise reasonable market value in the company, whilst allowing the owners to decide on the pace and form of their own exit. It’s good news for employees; they can effectively own the business without having to raise their own funds.”
The transaction was supported by employee ownership specialists Ownership Associates UK and legal advice provided by Thorntons Law.
