Edge Analytics has been sold to an Employee Ownership Trust by its founder, Dr Peter Boden, and shareholders, Richard Culf and Andrew Fowler. This deal has seen its team of 17 take full ownership of the company and has seen the appointment of three new Directors: Martyna Jasinska, Dr Kate Staines, and Dr Rebecca Hughes. Former shareholders, Dr Peter Boden and Richard Culf will now take on positions as Principal and Technical Consultant respectively, with Andrew Fowler remaining as Business Director.
These changes will continue to support the growth and development of Edge Analytics, whilst giving the whole team a stake in the business. Dr Peter Boden explained the decision to sell Edge Analytics to an EOT:
“Looking at all the possible options when it came to succession planning and exit strategies, the sale to an Employee Ownership Trust was very appealing. It will give our team and clients stability and opportunity for further development and growth.”
The change to employee ownership was met positively by all staff and provides new motivation and opportunity in a time of economic uncertainty.
The transition to the EOT structure was accomplished over a period of 2-3 months, aided by specialist professional support from LCF Law and Sagars.
What is an EOT?
An Employee Ownership Trust, introduced as part of the Finance Act in 2014, is a mechanism that transfers control of a business for the long-term benefit of employees. In creating an EOT structure, a new Trust is created, to which the owners of a company sell their shares, tax-free.
The sale must be for the majority of the shares so that the company becomes owned and controlled by the Employee Ownership Trust. At the point at which shares are sold, the new Trust may not have sufficient funds to pay the full value of the shares, so this is funded from future earnings of the business.
How does an EOT work?
An employee-owned company still operates as a commercially-run, limited company but either all or the majority of shares are owned indirectly by employees through the EOT. The EOT has a long-term perspective. Putting an EOT in place does not mean employees directly own the shares, rather that the shares the Trust holds will be used for the benefit of the employees in the form of annual bonus distributions.
For Edge Analytics, this has allowed a new team of Directors to be put in place, running the business with the ongoing support of the original owners of the business, but operating within the new EOT structure.
Why did Edge Analytics choose the EOT structure?
For Edge Analytics, succession planning – plus the opportunity for a small but extremely competent team to take greater control of the business – were the key drivers of the EOT choice.
The EOT structure was chosen as it provides a first step in the succession planning process.
Edge Analytics specialises in demographic analysis and forecasting. An unfortunate component of the demographic process is that every year we all get older and therefore, planning for old age is a necessity. The EOT process has created a new team of young, women directors, Kate, Rebecca and Martyna, taking control of the business with the ongoing support of the previous (ageing) owners of the business.
An EOT is an excellent way to promote greater employee engagement, with employees contributing to collective success and reward.
The EOT structure also has provided a tax-efficient way of selling the business, whilst putting control into the hands of employees.