Distie Target wants to become employee owned to protect staff if the company is swallowed by another company.
The West Yorkshire-based firm plans to adopt an Employee Ownership Trust (EOT) model which will see its 70 employees become majority owners of the business.
Existing shareholders, MD Paul Cubbage and owner Ian Prescott will retain a 10 percent minority stake in the new ownership structure each.
As part of the change, Cubbage will step down from the daily operations and become a non-executive director. Target will begin the search for a new boss to lead the business.
Cubbage said that the distributor’s high growth rates have made it an “increasingly attractive acquisition prospect”.
The MD added that Target’s stakeholders would’ve got more for the business, and a larger sum up-front, if they sold the business externally, but ultimately decided an EOT was best for its staff and the future of its customer relationships.
“Once you start to think about the culture of the business and what that means to our employees and our customers – of course all of that gets ripped to pieces because whoever takes over would do whatever they want to do with the business.”
EOT businesses can only be sold if it’s in the best interests of employees, and, if a sale goes ahead, the staff will all get a share of the deal, Cubbage said.
“Fundamentally it protects the job security of our people who’ve helped us get here, the culture and ethos of the business, and our relationships with our customers and partners against the potential impact of the takeover”, he said.
Employees will get an annual profit share, which is 10 percent of pre-tax profits, which will in future be income tax-free under EOT rules, Target claims.
