Could you sell your business to your staff? And why would you want to? Arbuckles restaurant chain owners John and Maxine Murphy have done just that thanks to the creative thinking of Avondale Corporate.
Arbuckles restaurants had grown significantly since its beginnings in the wake of the financial crisis, with its first restaurant more than tripling in size and a second boosting growth even further over the intervening period. But, with such a significant amount of work behind them the owners began to look at ways to step back from the business and this led them to consider a sale.
However, owners John and Maxine Murphy recognised that many of the loyal staff had been hugely instrumental in the success of the business and there was a very real risk that the great reputation of Arbuckles may disappear under new ownership. With this at the forefront of their minds they turned to Avondale to help them find a solution.
And the solution came in the form of an Employee Ownership Trust. Whilst sceptical at first, selling the business to their employees through an Employee Ownership Trust allowed John and Maxine to secure the future of the business and safely place it into the hands of the people who knew, better than anyone else, how to build on their past success. It also provided a highly tax efficient way to sell Arbuckles.
But how did this work for both the owners and the employees? Avondale Chairman Kevin Uphill provides an insight “An EOT is not a frequently used solution in the business sale arena but at Avondale this is becoming an increasingly desirable option for our clients who would like to reward their loyal staff. The business retains its good name and loyal staff by giving them a significant financial stake in the company, which is held in trust.
It offers a very efficient tax solution for owners and, in the case of Arbuckles, could be as much as 5% and worth £350,000 to an individual.” John and Maxine contributed £1.5m to the ownership trust from current profits and will continue to sit on the board of directors. A management team has been appointed who will oversee the transition and future of the business.
Kevin Uphill said. “The Arbuckles business was a great candidate for an EOT. Not only has this structure optimised the return for John and Maxine, but it secures the future of the business they have built up over the last 10 years, in the hands of those who understand it best.” The sale of Arbuckles to its employees created considerable media interest, from the ITV news to the Eastern Daily Press.
“We are so happy with the result of this process and, as you can see, so are the staff. You are right, I was a massive sceptic of giving away £1.5m of the cashflow but it has actually worked out perfectly. I wanted to be able to help all those people who have stayed with us in the hard times.”
John Murphy, Owner, Arbuckles