Scottish bakery supplier transitions to an Employee Ownership Trust

09/07/2024
Left to Right: Michael Hewitt, Clare McNeil and Stephen Currie (R&W Scott)

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

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

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 there is strong evidence to show they perform better than other types of ownership structures.

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

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 the hard work and commitment of its employees.

“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,” commented Clare McNeil, Commercial Director of R&W Scott.

“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.

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. and 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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