It happens, in businesses large and small across the UK. At some point most company owners will recognise that their time, energy or enthusiasm for leading a business will run its course and, as they explore succession options, some of those will choose EO.

The 2014 Finance Act has certainly encouraged many founder/owners to see EO as an ideal option, even if the tax incentive it offers is now under HMRC review. There’s also the attraction of the advantages EO offers them, their employees and customers when it’s done well.

Yet there’s another aspect that’s important here – recognising the major part they play in their business’s success. Finding how to hand on your experience and drive in a way that’s useful can be a real challenge.

One approach is to capture your reflection in a legacy document, which can be used by you or others to shape your guiding principles, mission and values. The late Sir Ove Arup, founder of Arup, epitomised the value of creating and sharing these insights in his Key Speech.

More recently, Guy Singh-Watson of employee-owned Riverford Organics has become another good example of how to define your legacy as part of stepping away. His decision to sell his final stake to an EOT was national news in May (2023).

So if you’re a company owner juggling the ‘here and now’ with mapping your future, where do you start?

Understanding what you want to achieve

Our MD Jeremy Gadd has worked with many clients whose succession planning includes EO and says he has ‘yet to meet’ anyone who has found creating a legacy document easy.

‘As a founder/owner, there are things you need to know and things you need to understand about employee ownership,’ he explains.

‘You need to know the technical and practical steps to becoming employee-owned – the legal and financial aspects of this change. Once you know that, you need to understand what you’re trying to achieve by using an EOT for your succession model.

‘It’s helpful to clarify what’s important for you and the people you care about. What’s important for your employees, your business, your stakeholders, your customers? And what will the impact be?

‘First, you have to start with yourself and your partner/family, if you have one. It’s not selfish. If you don’t get yourself into a place that will work for you psychologically you’ll risk messing things up. Sharing your thoughts through a legacy document can be a helpful place to start – if not for you, then certainly for your successors.’

‘The purpose of your legacy document is to effectively capture what has made your business successful. If you can identify the key parts of that journey, these can be used by your successor’s successor as a point of reference once you’ve gone. By being independent, JGA can help you do this’

Jeremy Gadd, founder and MD, J Gadd Associates

Reflecting on what’s made you successful

The next step is to reflect on your journey. Not all founder/owners will be comfortable with this kind of language or activity. ‘Often they don’t stop and take time to reflect because they will have been so busy building the business,’ Jeremy agrees.

‘That’s why doing this with someone independent with no vested interest or hidden agenda can be useful. The process of creating the legacy with the support of an experienced specialist can help to create a ‘good ending’ as you prepare to let go.

‘The purpose of your legacy document is to effectively capture what has made your business successful. If you can identify the key parts of that journey, these can be used by your successor’s successor as a point of reference once you’ve gone.

‘By being independent, JGA can help you do this. The questions we ask will enable you to create a legacy document that can be used to design your guiding principles, influence your values and build tools that can evolve.

‘This sets your business up to continue to be successful without restricting its ability to adapt the way it operates in years to come.

‘Your legacy document is a point in time, your opinion and view that will never change,’ he adds. ‘It’s okay that this is your interpretation because you’re the one who’s built your business, even if you’re the second or third generation of a family business. Your legacy is how you have taken it forward to hand over to a new ownership model.’

Focusing on the future when you’re not there

So what should you be considering if you want to create a sustainable legacy through EO?

‘Although this process is about personal reflection, it’s important to depersonalise certain elements of it too,’ says Jeremy.

‘Employee ownership is a long-term view. Think about a time when you won’t be there, think about your successor’s successor. What will it be useful for them to read?

‘Doing this won’t just help to create your legacy document: the process of moving your mind from the transactional ‘here and now’ – which can be intense – to ‘future focusing’ is also very useful.’

Using the legacy process to deliver better outcomes

‘My [Henley Business School] research showed me that, whether they’re leaving the business or not, the founder/owner’s readiness and understanding was crucial to the transition’s longer-term success’

Jeremy Gadd, founder and MD, J Gadd Associates

Jeremy speaks not just from his practical experience of supporting founder/owners to prepare to ‘let go’, but from the broader knowledge he’s gained through his research into the impact of succession planning through EO.

In fact, he enjoys this part of his work so much that he wrote his Henley Business School Msc dissertation on ‘The impact on leaders when their businesses become employee-owned’.

‘My research showed me that, whether they’re leaving the business or not, the founder/owner’s readiness and understanding was crucial to the transition’s longer-term success,’ he explains. ‘I saw how the process of creating a legacy document can help to deliver better outcomes as the business becomes EO.’

Today, as a founder/owner himself, Jeremy knows first-hand the highs and lows of building a business.

‘To have the privilege of hearing other founder/owners record this and facilitate their exploration goes to the heart of why I created JGA,’ he reveals. ‘It can be challenging: I can’t give them the ‘answers’ – it’s their legacy, not mine – but I do say ‘don’t do it by committee’!

‘If there’s more than one founder/owner, create more than one legacy document. This is your thinking and knowledge at this point of time.’

What should you do next?

At JGA, we have a proven track record of enabling founder/owners to prepare themselves and their people for a successful transition to EO.

We can also support you if you’re considering EO as one of several options for your exit strategy and the future of your business. As independent change consultants, we are experienced at providing knowledge, insight and support during challenging times.

Get in touch

Want to know more about how our Transition, People and Governance services can support you and your organisation? Get in touch.