Ovation Finance founder Chris Budd has sold his firm, opting for a model that allows staff to control the business without owning shares.
Shares in the company are being sold to an employee ownership trust. As Budd explains in an Adviser Lounge article, the trust doesn’t currently have any money because it is newly established so a deferred consideration has been set up.
Any profit the company makes belongs to the trust, which is then used to pay off the deferred consideration. Once that deferred consideration is paid, any future profit will be available for employees.
Budd will continue on at Bristol-based Ovation as chairman as well as setting up a consultancy advising businesses on how to move to employee ownership.
Budd says employee ownership is an alternative option for advisers thinking about succession planning or exiting their business.
He tells Money Marketing: “A lot of smaller IFAs are very proud of their businesses and a lot of their clients will be friends and family and they don’t just want to sell to a big corporate. This is a way of leaving a legacy.”
Budd adds: “It is good for both sides. To be able to transition to employee ownership it is not just about the legal entity. An employee-owned business is different and it needs to work in a different way and it needs different processes and decision-making. It is not an overnight thing. It took me five to seven years.”