Family-owned, Stockport-based Rowlinson Knitwear has set up an Employee Ownership Trust (EOT) that has acquired a controlling interest in the company ensuring that employees have a real say in how the business is run. Employees, through an Employees Forum, will be able to influence major decision-making – from growth plans to board director appointments.
An EOT, introduced by the Chancellor last year, provides a tax neutral process for transferring a controlling interest in a Company to employees. In a structured deal worth £2.3m the Rowlinson management team, led by managing director Donald Moore, was able to negotiate fair terms without the funding pressures in typical MBO deals, ensuring that the company can now never be sold.
Rowlinson is thought to be one of the first EOTs in the North West. Its legal adviser, Stockport-based SAS Daniels LLP, advised the company on the benefits of the EOT and managed the legal process to bring about the transfer of business ownership of the Company to the employee trust. Accountancy firm, Clarke Nicklin provided the company with tax and financial advice and HSBC provided loan facilities to fund the transaction.
Chris Rowlinson, Production Director, said: “It seemed to us that the interests of everyone were best served by our family taking this action. In doing so we could secure the longevity and security of the business, which is our first concern. It just seemed the right thing to do in a business so strongly driven by ethics and our desire to support our employees.”
Jeremy Orrell, Finance Partner and head of the Corporate team at SAS Daniels, adds: “We are delighted that we have been able to help the Company in its transition to employee control. The structure brings so many benefits to privately owned companies, like Rowlinsons, who want to protect their heritage. Family-owned companies are often faced with selling their businesses to a buyer who could change the direction of, or even relocate, the business. With an EOT the shareholders benefit from a tax effective, structured reduction in their shareholding in the company, while the employees benefit from long-term stability.”
An EOT, which transfers business ownership to employees is similar to the John Lewis partnership model, where the shares of the company are held in trust. The trust is made up of four members, including employees, who act in the best interests of the business and its staff. This was important for Rowlinsons whose ethos is to value its people, suppliers and customers.
Established in 1935 by Wilfred Rowlinson, the company manufacturers 40,000 items of school and work wear every week from its ethical factories in Bangladesh and Egypt. It was awarded the Workplace Wellbeing Charter certificate, the first Stockport based company to do so, and holds the gold standard for Investors in People.
This article has been published in North West Business Insider, ‘Employees sew up deal for Rowlinson Knitwear’.