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Welcome to

Employee Ownership Association

Annual Conference 2018

Where employee ownership meets

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Welcome to Financing the Transition to Employee

Ownership

Facilitated by Rachel Williams – John Lewis Partnerships & Partners

Presented by Luke Copley-Wilkins – Carpenter Oak Ltd

Jeremy Burden - Capital for Colleagues

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Background to Carpenter Oak

• Designers and makers of Oak Framed buildings for both domestic and

commercial market

• Established in 1987, now the industry recognised leader in the sector,

regularly winning multiple awards.

• £4.5m T/O with 60 employees across 4 locations in Devon, Cornwall,

Wiltshire and Angus (Scotland)

• Company split in 1999, and remerged recently facing both challenges and

growth opportunities.

• Complex management and shareholder issues arising from the merger

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• Outlaw king trebuchet

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Carpenter Oak Shareholder issues

• 7 shareholders mix of founders, former management buy out team,

investors, no one controlling interest.

• Majority still involved as employees but recognise succession needed

• Significantly varying aspirations for culture and financial

• Majority opposed to trade sale

• Identified EO as an option, approached C4C through NSBRC

• Conversion of equity to shareholder loans inappropriate at this time

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19%

19%

10%7%

5%2%1%

30%

7%

Share holders

still in the

business

Share holders no

longer in the

business

Capital for

Colleagues

Carpenter Oak

Trust2018 Carpenter Oak

Shareholder mix

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15%

15%

8%

6%4%1%1%

24%

25%

Share holders

still in the

business

Share holders no

longer in the

business

Capital for

Colleagues

Carpenter Oak

Trust

2020 Carpenter Oak

Shareholder mix

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Journey/timeline towards EO

• Company lacking conventional institutional debt capacity, needed cash flow to

reorganise, grow & move towards EO.

• Difficulty in agreeing existing valuation, once completed, 10% was gifted from all

shareholder to a employee trust

• C4C initial equity investment, became largest minority shareholder (30%).

Recognising opportunities for growth and interest in EO.

• New funds to support reorganisation costs, start process towards EO,

rationalising management structure and invest in new initiatives

• Initial mechanism agreed to increase EO stake, now recognised this had issues.

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Challenges

Make EO clear and meaningful to all employee colleagues after period of

change and suppressed wages

Secure productivity gains which will drive returns to all shareholders

Manage transition from experienced former manager shareholders to

new less experienced generation

Balance financial interests of company, trust and exiting shareholders –

governance and communication / performance management and

reporting.

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• Created an ability to move towards EO without suffocating the

business

• Ensure all shareholders are aligned with aim, value & timescale

• Establish the valuation method is suitable, engaging & realistic

Lessons

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Questions and Discussions

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Thank you. Please make your way to

Kings Suite for refreshments

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