Everything you need to know about Employee Ownership
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What is Employee Ownership?
Employee ownership is a business model where the people who work for the company also own a share in it. This means employees benefit directly from the success they help create - both financially and by having more of a say in how the business is run. It creates a stronger sense of involvement, motivation and shared purpose across the team.
Unlike traditional ownership structures, where decision-making and profits are typically controlled by external shareholders or a small group of founders, EO companies embed their employees at the heart of both governance and value creation. This encourages a deeper level of engagement, aligning the interests of employees with the long-term health and purpose of the organisation. EO is gaining momentum across the UK, Australia, Canada and Europe, driven by its benefits in improving productivity, innovation and resilience. It promotes a more inclusive and democratic workplace, where shared ownership leads to shared success.
Options for You
Business Owners
Valloop provides business owners with a great alternative to traditional selling methods and a practical way to transition their company into the hands of the employees. Whether you're planning for succession or simply seeking a more values-driven exit, the platform offers a streamlined, cost-effective alternative to a traditional sale. By helping employees become owners, Valloop ensures that the company’s legacy, culture, and long-term success remain in trusted hands, those of the people who know the business best.
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Smooth Transition Valloop’s platform streamlines the move to employee ownership with clear guidance and support.
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Cost-Effective A more affordable alternative to traditional sales, with fewer third-party costs.
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Legacy Preservation Protects your business values and ensures continuity with trusted employees.
For Employees
Valloop offers an easy and supportive pathway for employees to become owners of the businesses they contribute to daily. This transition not only provides a stake in the company's success but also offers wealth creation and a voice in the company.
Benefits of Employee Ownership
Employee ownership offers a wide range of benefits for business owners, employees, private equity exits and disposals of non-core subsidiaries. It is increasingly seen as a more sustainable and values-driven model, especially suited to companies seeking long-term stability, loyal workforces and responsible growth.
1. Greater Resilience and Stability
Research shows that employee-owned businesses tend to be more resilient in times of economic stress. Because employees have a vested interest in the company’s success, they are more likely to pull together in challenging periods. These companies often have lower failure rates, lower staff turnover, and higher survival rates than their traditionally owned counterparts.
2. Improved Productivity and Performance
With ownership comes motivation. EO companies often see a measurable uplift in productivity, profitability, and innovation. Employees are more committed, more willing to contribute ideas, and more aligned with the business’s goals, leading to improved outcomes across the board.
3. Stronger Employee Engagement and Satisfaction
When employees feel genuinely valued and empowered, they are more engaged in their work. EO builds a culture where individuals have a voice, feel heard, and are motivated to take responsibility. This results in stronger morale, a greater sense of purpose, and a more collaborative workplace environment.
4. Support for Local and Regional Economies
Because employee-owned businesses are less likely to relocate or be sold to external interests, they tend to remain rooted in their communities. This local focus supports regional development, helps retain jobs, and contributes to a more balanced and sustainable economy.
5. A Responsible Route for Succession
For founders or business owners approaching retirement, EO offers a powerful alternative to selling to competitors or private equity. Transferring ownership to employees allows the legacy and values of the business to be preserved, while rewarding the people who helped build it. It also ensures continuity and minimises disruption.
6. A New Option for Private Equity Exits and Group Disposals
Employee ownership introduces a powerful, underutilised route for private equity exits and group business disposals. By selling to employees via structures like Employee Ownership Trusts you open up a new class of buyers, offering an efficient and profitable exit route for private equity firms and group businesses. For PE, it helps unlock ‘trapped’ assets, cut transaction costs, and accelerate fund closure – while boosting ESG outcomes by transferring ownership to employees. For groups, it reduces deal resistance, eliminates advisory costs, and speeds up capital redeployment by simplifying the disposal of non-core subsidiaries.
How does Employee Ownership work?
Though EO can take different forms, the underlying principle is the same: employees hold a meaningful financial and cultural stake in the company.
At Valloop we provide the systems, knowledge and capital to employees for them to incorporate into an Employee Ownership Trust (EOT) model, giving employees a share in both wealth and rewards, alongside influence over how the business is run.
Employee Ownership Trust (EOT)
The trust holds shares on behalf of all employees. This structure is increasingly popular. Employees are not individual shareholders but are collectively entitled to the benefits generated by the business, such as profit shares or bonuses. The trust is managed in the employees’ interests and supports inclusive governance.
Funding the Transition to EO
Moving to employee ownership involves financial support. Valloop will provide all the capital required specific to the requirements of each transition.
Governance and Employee Involvement
True employee ownership is about more than financial benefit, it’s also about meaningful participation in the life of the business.
- Representation and Voting Rights
In some ownership models, employees have voting rights on major decisions, just like any shareholder. They may elect employee representatives to be part of an employee ownership council giving them formal influence. - Cultural Shift and Transparency
Ownership fosters a more open and transparent culture. Employees in EO businesses are typically more informed about company performance and strategy, and more willing to speak up, challenge assumptions, and contribute to innovation. This cultural shift can be just as valuable as any financial gain.
FAQ's on Employee Ownership
Employee ownership (EO) offers a powerful approach for SMEs. This model is effective across a variety of sectors, including manufacturing, healthcare, information technology, catering, and many others. By encouraging shared ownership and collective responsibility, EO helps businesses grow stronger and more resilient.
Deciding whether employee ownership is the right path for your business depends on your specific goals and circumstances. To better understand your options, contact us and we'll help guide you on the next steps.
Typically a few months, depending on the size and complexity of the business and how advanced in the process the company is.
With our platform it can be done in a matter of weeks, if everyone is on board and ready to move the process forward.
However, we always take each SME at their own pace and at the right speed for them - no one is rushed and the process can take as long as you wish and feels right for you and the business.
Moving to employee ownership involves financial support.
Valloop will provide all the capital required specific to the requirements of each transition.