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Scottish bakery supplier transitions to an Employee Ownership Trust

09/07/2024

Lanarkshire-based premium bakery and confectionery ingredients supplier R&W Scott has announced that, from 8 July 2024, it will operate under an Employee Ownership Trust (EOT).

Under this new structure, the EOT acquires all the company shares to benefit its employees, allowing R&W Scott staff to participate in and influence the company’s future direction without having to own or buy shares directly.

Background on Employee Ownership Trusts

EOTs were introduced by the government a decade ago to encourage more shareholders to adopt this corporate structure.

This form of ownership is gaining popularity – there are now over 200 employee-owned companies in Scotland – and strong evidence shows they perform better than other types of ownership structures.

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The current leadership team bought the 144-year-old business through a Management Buyout (MBO) in 2018 and has delivered on its 5-year growth plan to arrest losses, safeguard employment, and achieve annual Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of £2m.

Motivation Behind the Transition

The decision to create this new structure was driven by the desire to sustain the company’s independence and recognise that R&W Scott’s success was built upon its employees’ hard work and commitment.

Clare McNeil, Commercial Director of R&W Scott Employee Ownership Trust, said: “Many businesses in our sector are acquired by larger competitors or outside investors as they grow. To safeguard employment here and continue to deliver sustainable growth, we’ve created the R&W Scott Employee Ownership Trust.“

“Since we bought the business in 2018, we’ve delivered year-on-year growth, and our plan is to maintain that trajectory for the long-term benefit of our employees.”

Operationally R&W Scott’s senior leadership team, including Stephen Currie, managing director, Clare McNeil, commercial director, and Michael Hewitt, finance director, will continue to oversee the day-to-day operations.

John Easton will exit the business but will hold a position on the Trust board representing the outgoing shareholders.

Funding the Transition

R&W Scott’s management team has opted to secure external funding to speed up the EOT transition process and was introduced to specialist bank, Shawbrook by advisors, HNH Group.

Shawbrook will be providing a hybrid funding facility, combining asset-based lending with a property and cashflow loan to support the acquisition from the original owners and assist with R&W Scott’s continued growth plans.

Michael Hewitt, finance director at R&W Scott commented, “The decision to move to employee ownership feels right for our business right now and we want to make this move as seamless and effortless for everyone involved.

“Working with a funder like Shawbrook who understands the processes and requirements is central to meeting this objective.”

David Cayzer, Director at Shawbrook, said, “As more and more business owners consider succession planning and retirement exits, EOTs have become a more prevalent option in the market.

“We have supported a wide range of organisations with funding to fast-track these transitions.

“We are delighted to be working with Michael and the team at R&W Scott with funding for their EOT and look forward to seeing the business grow as it progresses through this exciting stage of its journey.”

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