Right now, times are tricky for businesses of all shapes and sizes. Uncertainty abounds across every industry as Brexit (and all its different permutations) looms on the horizon.
If you are a business owner, you’re no doubt craving clarity while, at the same time, needing the key members of your team to be on the same page and pulling in the same direction – perhaps more so now than ever before.
If you’re looking to grow quickly with a view to selling or simply want to add the next £million to your turnover, then one of the most effective ways you can do this is by getting your senior management team to go the extra mile.
They are the most important people to drive your business forward and an employee share scheme is a great way to help make your success, their success.. The scheme, which is suitable for most small businesses, aligns the financial interests of key staff with you, the business owner. It encourages the most important people on your team to think like business owners without the complications of share ownership.
It supplements your senior management team’s remuneration package (and, as such, makes the package itself more financially attractive). A good lawyer will ensure the scheme reflects your aims and objectives – whether that’s a particular financial milestone or an exit in a certain number of years.
It works by setting a contract between the employee and the company which gives the employee a right (the ‘option’) to buy shares in the company at a certain point in the future for a price agreed today. So, in principle, they benefit from the increase in value of the company between the date they get the option and the date they actually buy the shares.
At Murrell Associates, we’ve found these schemes particularly effective for business owners looking to quickly grow a business with a view to a sale.
The first step in setting up an employee share scheme is to take advice from your accountant and lawyer who work together to design and create the scheme rules and obtain tax clearance from HMRC (if using a tax approved scheme like EMI).
If you’d like to find out more about how an employee share scheme can benefit you and your business, or any of the other factors involved in growing a business with a view to sale, we’d love to help.
To find out more, please contact Henry Maples, Partner at Murrell Associates, on 01872 226998 or firstname.lastname@example.org. Alternatively, we are holding a special breakfast seminar on Wednesday, March 6 at Epiphany House in Truro where we will cover key aspects of employment law, intellectual property law and share incentives for employees. Find out more and book your spot here.