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This blog is to announce the launch of the new online Eternal Business Programme. To explain why this is so exciting, however, I need to take you cave diving…
Jokes You Sometimes Just Can’t Get
There is a story I tell which is intended to illustrate where the focus of the transition to an EOT should lie.
An owner of a business came to see me. They were interested in setting up an Employee Ownership Trust (EOT) to which they would sell a controlling interest of the business. A corporate finance company had ‘sold’ the idea to them on the basis of the capital gains tax exemption. When pitching their services, they told owner that they could “Turn round the deal in six weeks for a fee of £300,000.”
Tongue in cheek, but looking to make a point, I replied that I would like to make a counter offer. I would charge them £250,000 and turn the deal round in two years.
Whether you get the humour in this story will reveal how well you understand the challenge of selling to an EOT. To illustrate the point, I would like to tell you about one of my favourite books
Jaguars Ripped My Flesh
One of my favourite books, book when a student (so a fair few years ago now!) is Jaguars Ripped My Flesh by Tim Cahill. It is a collection of articles he wrote for Outside magazine about adventuring.
One of the pieces describes a cartoon about cave diving. In this cartoon an instructor performs a series of last-minute checks with his pupils before they dive into a underwater cave. For example, he checks that they have one flashlight between two people.
Tim doesn’t get the joke, and so asked a cave diving friend to explain. The friend tells Tim that the morbid humour in the joke is that from the instructions given you can tell that everyone is about to die. Tim remains confused.
To help Tim understand, they go diving. During this experience, the silt from the bottom of the cave makes visibility extremely poor and he becomes disorientated. Without his own flashlight, he would quickly have become lost. Several other scary moments that his friend had prepared him for – unlike the instructor in the cartoon – mean that by the time they resurface, he understands the humour of the cartoon.
Morbid Humour
The point of this tale is that there are some things that are very difficult to understand without actually doing them. The humour in my story about the corporate finance offer of turning a deal round in six weeks is that it takes months, more likely years, to put into effect the cultural changes required to transition a company into employee ownership.
The morbid humour in my story is that by trying to turn round the deal in six weeks, and thereby not making the changes for employee engagement that are so essential, the company may very well not survive the transition. This in turn means the company will not continue to make the profit which will be needed to pay the owner for the shares.
So by focussing solely on the tax and failing to prepare the business, the owners may well end up with much less than they would have had if they had just sold to a third party and paid tax.
Helping Owners Decide
The first step in the transition to employee ownership is for owners to decide if this is actually the right destination for them. This means understanding that this is about cultural change and employee engagement, and not simply about saving tax on the sale price. It is about preparing the narrative in order to engage the leadership team, and then preparing a second engagement plan in order that all employees can be brought on board.
The Eternal Business Programme is therefore split into three distinct courses. Course one is specifically aimed at owners to help them decide if this is the right end to their entrepreneurial journey. It provides all the information needed to understand the considerable advantages of the EOT, but also to understand the challenges that will lay ahead.
Course two and three of the programme then help first the leadership team and owner, and secondly all employees, to prepare the business, ready for the big day when the EOT buys shares from the owner and takes over.
This is an exciting journey, and one which is invigorating and motivating for employees. It is not, however, one that can be achieved within six weeks!
If you’d like to see the curriculum for the Eternal Business Programme, or to sign up for course 1, please take a look here. If you have any questions, drop Chris a line on chris@theeternalbusiness.com
SPECIAL OFFER!! The first 10 companies to sign up to the course will get a free 90 minute consultation with Chris by Skype or in person.