The Great Cornish Food Store, based in Tregurra Park, Truro and exclusively stocking food and drink sourced from around 200 local suppliers, celebrated its sixth anniversary and transitioned to employee ownership on 30 June 2022. Nikki Reid, supported by Megan Bingley, was delighted to provide assistance and advise on the legal aspects of the transition.
Ruth Huxley, who founded the store in 2016, said “The store is in great shape and we have an incredible team, who very much deserve a boost after all the challenges they have handled so admirably over the past two years. I’m convinced we can really power ahead now as a purpose-driven company, becoming even more successful while preserving our values and integrity long term”.
Commenting on the legal advice from Murrell Associates, Ruth Huxley said
“When I was thinking about this move I knew I needed some expert help and wanted to work with a legal team who I knew I could trust to safeguard the future of my business. Murrell’s had done a fantastic job for me when I set up the store but I had no idea whether they were familiar with the mechanics of employee ownership. I needn’t have worried. I had complete confidence in Nikki and Megan from our first meeting; they understood exactly what I was looking for and were supremely professional, helpful, well organised and supportive throughout the process, making what could have been traumatic very straightforward. “
Why employee ownership?
Nikki Reid, a Legal Director at Murrell Associates, said “there are a whole host of very good reasons to consider employee ownership as an alternative option to the more traditional business owner ‘exit’ routes, such as a trade sale or management buy-out.
There are obvious potential tax incentives; for example, if structured correctly, the sale of a company into an employee ownership trust (“EOT”) can be made free of capital gains tax and the company owned by an EOT is able to pay annual bonuses of up to £3,600 per employee free of income tax.
However, in my experience, tax incentives are not usually the business owners’ main reason for deciding to go down the route of employee ownership and if this is the only driver for the transaction a seller could well come unstuck further down the line. The seller often leaves a large proportion of the agreed purchase price outstanding to be paid by the EOT over a long period of time; the payment of which ultimately relies on the ongoing success of the business.
Ruth was very clearly driven by her desire to secure the long term success of the business for its employees and local suppliers, whilst preserving the ethos and reputation she has worked hard with her team to build; the EOT model is designed to help achieve these goals.
We loved working with Ruth and The Great Cornish Food Store team and we are excited to see that businesses in the South West are increasingly considering the benefits of employee ownership. The Great Cornish Food Store’s transition to employee ownership follows another excellent Cornish business, Radix Communications (tech B2B copywriters based in Penryn), who we worked with to successfully transition to employee ownership at the end of 2021.”
If you would like to have a chat about employee ownership and how this might work for you then do get in touch. Further information on the EOT model can also be found here.
If you would like to discuss any of the issues raised in this article, Nikki Reid, Legal Director, would be delighted to hear from you. You can reach Nikki on 01872 226990 or nikki.reid@murrellassociates.co.uk.
The information provided in this article is a summary for general information purposes only and does not constitute legal or other professional advice and cannot be relied on as such. Any law quoted in this article is correct as at the above date. Appropriate legal and financial advice should be sought for specific circumstances before any action is taken.
