A while ago I was contacted by a young lady who was a chartered Financial Planner for a privately owned IFA practice.
To set the scene, she was 28 and clearly could be labelled a bright young thing. The company she worked for had 20+ employees and five directors.
The reason for making contact with me was to ask my view on her company’s share ownership plans. She had read some of my articles about succession planning and the Employee Ownership Trust (EOT), and wanted an independent opinion.
Her company had not long previously installed a share incentive plan. Like many of her colleagues, she was buying shares on a monthly basis, building up her ownership in the business. Her question was simple: what was my view of this scheme?
If 20 years of being a financial advisor has taught me one thing, it is not to offer opinions on people’s circumstances without sufficient information! I did, however, offer one thought.
I replied that share invective plans are, as a rule, a good idea. But I then asked what was her exit plan. It’s all very well building up a minority shareholding, but how was she going to get her money out?
She admitted that she did not actually have a plan, and hadn’t thought this aspect through. She would go back to the company and ask this question.
She then called me again a week or so later. She had spoken to her finance director, who had told her not to worry, as there was an exit plan in place. The plan was that the business will be sold to a third party in five years time, and that everyone with shares will get their money out at that point.
The young lady then told me that she had resigned.
She wasn’t working for a company in order to see it sold. She wanted to help build a business which aligned with her view of the world, which matched her own sense of purpose, and values. Sure, if she could make some money too that would be great, but she didn’t just want to build up something for it to then be sold on.
There is a rise of employees wanting to work for companies that have a clear purpose. This is why younger people move jobs so much, not because they are somehow ‘fickle’, but because not many companies are clear on their purpose on attracting employees who share that purpose.
They also want clarity over their future – and therefore the future of the business. Any IFA practice with owners aged 50+ will undoubtedly have employees wondering about the future of the business.
The Employee Ownership Trust (EOT) is the exit route which is all about creating a business to last. It is the only option for being able to both receive a fair value for the sale of the business, and ensure the business continues in the long term, leaving a legacy.
Chris Budd runs the Eternal Business Consultancy, including the online Eternal Business Programme, which helps companies identify and clarify their purpose, and make changes to the business so that owners leave a