Architect moves to employee ownership structure in Birmingham advised deal
A Birmingham architectural practice has moved to an employee ownership structure in a deal advised out of the city.
ADP, a national architectural practice with a base in the Jewellery Quarter, called in law firm Shakespeare Martineau’s specialist corporate finance team when it opted to change its structure.
Following 50 years in the architecture business, ADP has placed the majority of its shares in an Employee Ownership Trust to empower its 134-strong workforce, harness their creativity and enthusiasm, and allow them to receive income tax-free rewards for the first time.
Opting for indirect share ownership, which places shares into an Employee Ownership Trust, ensures employees have an immediate impact on the future running of the business, while provisions have been made to protect its long-term stability. Indirect share ownership also removes the need to buy back shares if an employee chooses to move on from the business.
Gary Davie, head of employee ownership at Shakespeare Martineau, said: “For many businesses, people are the most important asset and if they act and behave as owners, increased productivity, efficiency and profitability often follow suit and I have no doubt that this will be the case for ADP.
“Making the move to employee ownership doesn’t have to be daunting. As with ADP, the transition can be done in stages, or by way of deferred payments, to alleviate any pressure on cash flow or bank finance available. This means that a proportion of the shares are purchased initially and placed in an Employee Ownership Trust, leaving the remaining shares to be purchased at a later date if they wish.”
David Heslop, managing director of ADP, said: “For an organisation with a long-term view and whose main assets are the skills and knowledge of its employees, choosing a corporate form that improves employee engagement and retention and makes succession less of a problem is vital. For ADP, employee ownership was the obvious choice.”
Mr Davie added: “While empowering the workforce to make commercially-sensitive decisions can be a good idea, it can strike fear into some management teams, particularly if they have been used to making decisions in a more autocratic way. Therefore, it is essential that businesses thinking about employee ownership options secure management team buy-in from the start.
“The key thing to bear in mind is that employee-owned businesses will still need a strong and effective management team to guide decision-making and this is why ADP has chosen to appoint an employee director to the management board.”
