Shakespeares shapes up with weight management firm deal
LAW firm Shakespeares has advised global weight management business, Cambridge Weight Plan, on its switch to become an employee-owned operation.
The company has followed the example set by the John Lewis Partnership after its three former co-owners decided to exit the business.
As part of the buy-out, the total value of the majority shareholding, previously owned by Eileen Skinner, Robert Thompson and John White, has been transferred to an Employee Ownership Trust (EOT). The completion of the transaction for an undisclosed sum means that the company, which was previously 49% employee owned, is now wholly owned by its 190-strong workforce.
The exiting co-owners acquired Cambridge Weight Plan in a management buy-out in 2005 and over the past decade its turnover has increased more than nine-fold. In addition to its UK workforce of direct employees, the company uses a network of more than 2,800 independent sales consultants, located across the UK and overseas distributors and consultants to service customers in more than 30 countries worldwide.
Corporate finance experts at Shakespeares said the move to become 100% employee-owned was still surprisingly rare.
Gary Davie, a trustee of the EOT and corporate partner at Shakespeares, who specialises in helping companies make the transition to employee ownership, said: “While relatively unusual, moving to an employee-owned business model can be an excellent solution for business owners planning an exit but it is rarely given enough consideration. Opting for employee ownership and the transfer of shares into an Employee Ownership Trust can help exiting shareholders to protect the long-term interests of the business at the same time as realising value from their investment.
“The new tax exemption that took effect in October 2014 allows employees of employee-owned businesses to receive tax-free bonus payments of up to a value of £3,600 per tax year and earlier in the year, a Capital Gains Tax (CGT) exemption was also introduced for those realising value from such investments. Specifically, this CGT exemption applies to the disposal of shares that result in a controlling interest in a company being transferred into an Employee Ownership Trust.
“Employee-owned businesses benefit in all kinds of ways from having a more motivated and productive workforce, for example, but these tax incentives have made opting for this business model an even more attractive option.”
Mike Swinburne, Finance Director at Cambridge Weight Plan, said: “This is an exciting time for all at Cambridge Weight Plan and the move to 100% employee ownership is in many ways a natural step to take and is in keeping with our corporate ethos. Backed by employee power, the business is now well placed to continue its growth plans and spread the word about our life-changing weight management programmes far and wide.”
Parisi Tax advised on all tax aspects in order to see the deal through to fruition. In addition, Lloyds Bank provided funding for the transaction.
