ECJ EUROPEAN Cleaning Journal

Europe’s SMEs are facing a succession crisis, primarily driven by a shortage of heirs interested in taking the reins. In response, ageing owners are resorting to ‘giving away’ their businesses, reports Hartley Milner.

Millions of years after our ape-like ancestors abandoned life in the treetops, enterprising Brits Rebecca and Tristram Mayhew made it their business to entice us back up there again. And within just six weeks in 2002 the couple had opened their first Go Ape experience, at Thetford Forest in Norfolk.

Since then, the company has greatly expanded its range of activities over 35 sites in the UK and 16 states across the US. “It’s been a huge team effort, driven by a shared passion for adventure and shared values,” said Tristram.

The couple set out to build a company founded on the core principles of keeping the ‘adventure’ in adventure, being socially and environmentally responsible – “but not preachy” – and to always “do the right thing”. However, they began to wonder how they could protect the company’s culture and values for the long term.

“It’s been something that has been present all the way along the journey,” said Rebecca. “We’ve always thought ‘what is it going to look like into the future?’ We’ve got three children and we’ve always been clear that they would choose their own destiny and their own paths, and they’ve always thought that as well.”

Exploring their succession options, in 2019 the Mayhews entered into talks with a private investor but were not happy to hear they would have cherry-picked the best courses run by the business and sold the rest of it on. “We felt they wouldn’t be the right custodians for our family at Go Ape,” said Tristram.

Instead, they opted to hand over the business to their employees in a move to ensure it retained the ethos it was founded upon. The couple transferred 90 per cent of their shares into an employee ownership trust (EOT) to benefit all current and future employees. The remaining 10 per cent they held back for themselves as an ongoing legacy connection with the company they had an emotional stake in but no longer have control over.

Employee-owned

Another step in the transfer process was to establish an employee council. Many EOT companies decide to have such a body to provide a channel of communication between employees and directors, or between employees and the trustees of the EOT. It provides a forum for stakeholders to have a say on decisions affecting the business.

Since becoming employee-owned, Go Ape has scooped prestigious plaudits. Last October, the company received the RoSPA Gold Award for Health and Safety for the seventh year running and in December it was ranked 50th in the Top 100 UK Best Companies to Work For, and ninth in the hospitality and leisure sector.

Employees participating in EOTs do not own the business in the conventional sense. Rather, the owner sells their controlling shares to a trust that holds them on behalf of the workforce. Staff benefit from future profits but are not required to pay for their stake. The company pays the purchase price to the original owner over time, usually out of its profits. The business continues to run as normal with employees also benefiting from tax-free annual bonuses (up to £3,600 per employee). This indirect form of ownership is popular with companies wanting to preserve their legacy and culture.

As well as the ‘indirect’ model, businesses have two further options … ‘direct’ and ‘combined’ (hybrid) ownership. With the direct model, employees personally hold shares in the business. The company may gift shares to staff members or offer them the opportunity to buy shares after working there for a specified period of time.

Tailored schemes

Businesses going down the ‘combined’ route can use a combination of the indirect and direct forms of EO according to their needs. A portion of the company may also be owned by others, such as a founder/owner or external investors. EOs can be tailored to the successors’ unique requirements.

Employee ownership pros…

• Productivity: Employee-owned companies often benefit from improved productivity, are more resilient to economic turbulence and have better motivated staff.
• Job security/retention: EO businesses are more likely to retain employees during economic downturns.
• Tax benefits: Significant tax advantages may be available, including tax-deductible company contributions and capital gains tax relief for selling owners.
• Wealth-building: Employee owners often earn higher wages and report significantly greater household wealth. Income wealth gaps based on gender and race are significantly narrowed.
• Succession/legacy: Selling to an EOT can provide a structured and tax-efficient exit strategy that protects the company’s culture and ensures it remains rooted in the local community.
And cons…
• Complexity/expense: Establishing an employee ownership structure 
requires significant legal, financial and professional guidance, which can be complex and costly. 
• Cash flow: The company needs sufficient cash flow to buy back shares from employees when they leave or retire.
• Deferred payouts for sellers: Selling owners often receive payment for their shares over several years rather than in a lump sum, which means they take on more risk.

Loss of control

• Relinquishing control: To qualify for certain tax benefits, owners must give up majority control of the company. While management teams usually remain in place, decision-making can take longer if consensus-building is required.
• Sale price: Selling to an EOT may yield a lower price than a sale to an external trade buyer, who may be prepared to pay a premium for strategic reasons.

Britain is viewed as a global torchbearer for employee business ownership. The UK showed the way with pioneering businesses like the John Lewis department store chain, which became an EO partnership in 1929, and Scott Bader, now a global chemical company that transitioned in 1951. More businesses followed throughout the 1980s and into the early ’90s, boosted by the privatisation of state-owned industries and assets during the Thatcher era.

But the big surge in transfers came after 2014 when tax reforms saw the introduction of EOTs for succession planning, making indirect ownership via trusts the dominant model they are 
today. In most cases, employees become 100 per cent owners of the company without having to spend a penny of their own money.

By mid-2025, the UK had around 2,470 worker-owned companies, employing more than 358,000 people … a 30 per cent increase in 2024 alone, according to the Employee Ownership Association (EOA). Sectors include retail, catering, engineering and professional services as well as leisure. Types of EOs range from employee stock ownership plans to EOTs and cooperatives. While large companies are well-represented, growth in the UK is led overwhelmingly by small and medium-sized enterprises.

Tax blow

However, the “extraordinary growth” in the UK’s employee ownership sector took a hefty hit last November when Chancellor Rachel Reeves slashed the 100 per cent capital gains tax exemption on transfers to 50 per cent, sparking a furious rebuke from the EOA. The move “breaks the very mechanism that finances transfers of businesses to their employees”, it said, adding: “Instead of two business transfers per day, we’re now practically at zero.”

The rest of Europe has been playing catch-up in moving to employee ownership, despite the European Parliament in 2014 passing legislation providing a tax exclusion for the sale of businesses to EOTs. While the number of employee share plans in European countries has increased, the percentage of people participating in them has declined, figures from the European Federation of Employee Share Ownership (EFES) show.

Most effective model

The federation’s latest annual economic survey shows that 6.7 million Europeans were enrolled in employee ownership schemes in 2024, with one in five being a large public company. But the picture was distorted by the high ownership figures in the UK, where - along with Norway - the number of employee shareholders had increased over the past 12 years.

With worker participation falling in Europe, the EFES survey points to a “paradigm shift” in employee ownership away from large companies and towards SMEs. The main reason for this, it suggests, is that only 35 per cent of employees in large European companies are still based in their home country, meaning only a small minority of them are able to benefit from share ownership tax incentives in national legislation. But in the SME sector “we are rapidly moving towards a situation where one in ten businesses will be employee-owned”, the report concludes.

And on the growing adoption of EOTs across Europe, the report notes that the employee ownership trust formula introduced in the UK in 2014 is now “by far” the world’s most effective model - especially for business succession - due to the “simplicity, ease and adaptability” of its mechanisms.

The EU says it is responding to the region’s succession crisis by implementing “active, structural interventions’’. These include reducing the regulatory burden on businesses, attracting young talent into key sectors such as farming and “cementing a more independent, geopolitical EU”. Other key actions include helping promote a new generation of business leaders.